Preamble

The House met at a Quarter past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — LEVANT STATES (FRENCH TROOPS)

General Sir George Jeffreys: asked the Secretary of State for Foreign Affairs whether an agreement has yet been come to as to the date on which French troops will be withdrawn from the Levant States; what is the position in regard to the negotiations on this matter; and whether an early decision may be expected.

The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): No, Sir. We are exchanging views with the French Government on this matter. I cannot say when a decision will be reached.

Sir G. Jeffreys: Is it not a fact that the people of Syria are getting very disturbed and worried about the apparent delay in these negotiations? Will the right hon. Gentleman also say what responsibilities, if any, rest upon British troops for preserving order and avoiding bloodshed?

Mr. Bevin: I know that the Syrians and the Lebanese are irritated at the delay, but we pledged ourselves to keep order, and we are pursuing the negotiations. I think I had better leave it at that.

Oral Answers to Questions — RUSSIA (TRADE AGREEMENTS)

Brigadier Fitzroy Maclean: asked the Secretary of State for Foreign Affairs whether any reply has been received to the protests addressed by His Majesty's Government to the Soviet Government regarding the Soviet-Hungarian and Soviet-Roumanian trade agreements.

Mr. Bevin: Yes, Sir. A reply was received this morning stating that the Soviet Government do not consider that legitimate British interests are affected by these agreements which have as their aim to promote the development of economic relations between the Soviet Union and countries geographically near her. I have not yet had time to consider this reply.

Mr. Eden: Is it a fact that the Soviet Government themselves offered, at Potsdam, fuller participation by us in the Control Commission, and should not they therefore have consulted us, in view of the offer they made?

Mr. Bevin: I think that one of the most disturbing elements in endeavouring to get united action in this business is this constant bilateral procedure.

Oral Answers to Questions — YUGOSLAVIA

Flight-Lieutenant Teeling: asked the Secretary of State for Foreign Affairs (1) whether he hasany information as to whether the Tito-Subasich Agreement is being carried out;
(2) Whether, in view of the fact that the recognition by Great Britain of the Yugoslav Government was based on the Tito-Subasich Agreement, he can give any information as to the reason for the resignations of M. Grol and M. Subasich.

Mr. Bevin: As far as I am aware, no explanation of the reasons for the resignation of Dr. Grol and Dr. Subasic has been issued by the Yugoslav Government. It is known that Dr. Grol resigned becausein his opinion a number of new laws, and in particular the electoral law, had been given effect without adequate opportunities for discussion in the Cabinet, and because he considered that these laws would lead to the establishment of a one-party system. Dr. Subasic's letter of resignation has not been published. The position is, at present, under discussion between His Majesty's Government and the United States and Soviet Governments, who endorsed the Agreement at the Yalta Conference. A statement about the attitude of His Majesty's Government must await the completion of these discussions.

Mr. Pickthorn: Did M. Subasich give any explanation of his resignation to His Majesty's Chargé ďAffaires when he called upon him?

Mr. Bevin: No.

Oral Answers to Questions — WESTERN AND NORTHERN EUROPE (ECONOMIC PLANNING)

Mr. Warbey: asked the Secretary of State for Foreign Affairs whether, in view of the recent electoral victories gained by the Socialist and progressive parties in France and Norway and of the predominant position held by similar parties in other countries of Western and Northern Europe, including the United Kingdom, he will consider the advisability of inviting official representatives of these countries to discuss, at a joint conference or by other suitable means, the co-ordination of their economic and commercial policies in order to ensure full employment and rising standards of living and other economic and social question of mutual interest.

Mr. Bevin: I do not think that a conference on the limited scale suggested by my hon. Friend would secure the ends he desires. His Majesty's Government will co-operate closely with all these countries in all measures calculated to secure full employment and higher standards of living.

Mr. Warbey: While appreciating that reply, may I ask the Foreign Secretary whether he is aware that there is now, for the first time, a majority of these countries in favour of State economic planning for these ends? Does he not think it would be useful to provide an opportunity for their representatives, with us, to get together and endeavour to keep their plans in step and shape, in order to assist one another?

Mr. Bevin: I cannot ride two horses. I am committed to the United Nations Organisation, and I am still hoping that, that organisation will work. Therefore I must pursue a policy not of dealing with separate entities in this way, but of aiming to make united action work.

Earl Winterton: Is it not a fact that it would be most undesirable that international relationships should be conducted on the basis of the political complexion of particular countries? Is the right hon. Gentleman aware that we admire him as the representative of this nation, and not as the representative of a party?

Mr. Bevin: I have never known until now on what the admiration of the right hon. Gentleman was based, but the world

is so small, economically, that we have rather to treat it as a whole, and not sectionally.

Mr. Cocks: In the United Nations' Charter are there not provisions to provide for regional areas?

Mr. Bevin: Yes, but if I express regret at bilateral action by other Powers, I do not think I ought to imitate their action in pursuing that policy.

Oral Answers to Questions — EASTERN EUROPEAN COUNTRIES (ELECTIONS)

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for Foreign Affairs if he will make a statement in regard to the progress being made in Hungary, Roumania and Bulgaria towards the achievement of democratic government and to recognition by His Majesty's Government.

Mr. Boothby: asked the Secretary of State for Foreign Affairs whether he will give any information regarding the state of affairs in Hungary.

Mr. Langford-Holt: asked the Secretary of State for Foreign Affairs whether he will make a statement on the proposed elections in Hungary.

Mr. Bevin: I understand that the Hungarian political parties have now decided that general elections should be held on 4th November as originally planned on the basis of separate party lists. His Majesty's Government welcome this decision and as soon as it is clear that the elections will be fairly conducted they will be able to consider the recognition of the Hungarian Government. In Rumania a constitutional deadlock continues and no progress has been made towards the formation of a representative government such as to justify recognition by His Majesty's Government. In Bulgaria elections are due to be held on 18th November. The opposition parties have unanimously decided not to participate in these elections on the grounds that in present conditions free and fair elections are impossible. His Majesty's Government are considering their attitude towards such elections.

Sir T. Moore: Will the right hon. Gentleman say whether he is satisfied with


the general spirit of co-operation by our Allies in this democratic re-education of these countries?

Mr. Bevin: I would not say that I was satisfied, but I have also to bear in mind that all these countries have emerged from a war, and we cannot get things perfect in a moment. It has taken 300 years in order that the hon. and gallant Gentleman may sit in this House.

Oral Answers to Questions — SPAIN (POLITICAL TRIAL, CADIZ)

Mr. McGovern: asked the Secretary of State for Foreign Affairs if he is aware that 22 anti-Fascists of the Spanish Resistance movement are being tried before a summary court in Cadiz, Spain, for demanding the end of the Fascist dictator ship of General Franco, and are liable to be instantly shot; and if he will immediately approach the other signatories of the Potsdam Declaration with a view to taking further steps against the Government of General Franco.

Mr. Bevin: I have nothing further to add to the reply which was given to my hon. Friend the Member for Reading (Mr. Mikardo) on 29th October.

Mr. McGovern: In view of the fact that large numbers of people in Spain are being done to death for their political opinions, will the Foreign Secretary make it known to the Franco Government that the people of this country are very much against the gangster method being adopted towards political opponents?

Mr. Bevin: In the reply to which I have referred I made that quite clear.

Oral Answers to Questions — DUTCH EAST INDIES

Situation

Mr. Keeling: asked the Secretary of State for Foreign Affairs whether he will give any further information about the situation in the Dutch East Indies.

Mr. Bevin: General Christison, the Force Commander, and Mr. Dening, Chief Political Adviser to Admiral Mountbatten, have met a delegation of sixteen Indonesians, including Dr. Soekarno. It is hoped that a meeting between the Dutch Lieutenant Governor General and the Indonesian leaders may take place shortly.

Mr. Keeling: Can the right hon. Gentleman confirm the news that a British brigadier was treacherously shot during a parley?

Mr. Bevin: That arises on another Question. I will answer it later.

Lend-Lease Equipment (U.S.A. Request)

Major Wilkes: asked the Secretary of State for Foreign Affairs what representations have been made by the Government of the U.S. to the British Government regarding the operations now in progress in Indonesia.

Mr. Bevin: Apart from a request to remove all United States markings from vehicles and other Lend-Lease equipment used by British forces in the Netherlands Indies, no other representations have been received.

Mr. Keeling: Would the right hon. Gentleman now take the opportunity to answer the supplementary question which I put to him earlier, and to which he replied that he would answer a question on the subject later; namely, whether he can make a statement concerning the alleged treacherous shooting of a British brigadier in that country?

Mr. Bevin: I have the answer here, but unfortunately the Question has not been called.

Mr. Driberg: In view of the critical situation in Indonesia, would my right hon. Friend consider making a statement at the end of Questions, in reply to these Questions which have not been put orally?

Murdered British Officer

At the end of Questions—

Mr. Eden: May I ask the Foreign Secretary whether, in view of the interest taken in certain Questions that were not asked today, and in view of the report of the murder of a British officer, he can now make a statement in reply to Question 21?
21. MAJOR WELLS,—To ask the Secretary of State for Foreign Affairs what information he has regarding the state of public order in Java; and what steps are being taken to protect, care for and assist the repatriation of British nationals, and especially of British, Imperial and allied and ex-prisoners of war.

Mr. Bevin: Fighting broke out in Soura-baya on 28th October, and the House will be aware of the B.B.C. report of the treacherous murder of Brigadier Mallaby,


Commander of the British forces there, by extremist Indonesian elements when arranging the details of a truce. His Majesty's Government are awaiting confirmation as no official report has yet been received. Batavia is reported to be quiet, but in a number of the other towns the situation is reported to be tense. In Sumatra British troops are in control of Palembang, Padang and Medan, and the situation is satisfactory.
According to the latest information received, only 256 British Commonwealth ex-prisoners of war at present remain in Java. These are mainly Indian, but a few from the United Kingdom are remaining voluntarily to assist in the identification of war criminals. Altogether a total of 2,497 ex-prisoners of war have been evacuated from Java, of which 59 were American nationals, 157 Dutch and the remainder British.

Mr. Eden: In view of the tragic news of the death of this gallant officer, will the right hon. Gentleman give the House further information on the matter as soon as he receives it?

Mr. Bevin: Certainly.

Mr. Keeling: May I ask why the whole of this information was not given in reply to Question No. 9, which was asked?

Mr. Bevin: When I was compiling these answers, the form of Question No. 21 seemed more appropriate for the answer. The hon. Member's Question did not ask for all the details asked for in Question No. 21. I was not aware that the hon. Member who had put down Question 21 would not be in his place to ask it.

Oral Answers to Questions — HUNGARY

British Prisoner of War

Flying-Officer Bowden: asked the Secretary of State for Foreign Affairs if he is able to give any information regarding 937633, Warrant-Officer R. H. Barratt, R.A.F., who escaped from Stalag VIIIB and after several months freedom in Hungary was taken by the Russians when they occupied Hungary.

Mr. Bevin: I urged the Soviet Embassy in London on 18th August to arrange for the release of Warrant-Officer Barratt. Ten days later I was informed that inquiries

were being made. On 10th October I asked the Soviet Embassy to let me have as quickly as possible the result of their inquiries.

Flying-Officer Bowden: Could my right hon. Friend tell us on what charge Warrant-Officer Barratt is being held?

Mr. Bevin: No, I cannot. I am waiting for the report.

Elections

Brigadier Fitzroy Maclean: asked the Secretary of State for Foreign Affairs whether the recommendations made by the Chairman of the Allied Control Commission in Hungary to the leaders of the Hungarian political parties, in respect of their election policy, were endorsed by the British member of the Commission.

Mr. Studholme: asked the Secretary of State for Foreign Affairs whether the American and British representatives have been consulted about Marshal Voroshiloff's election arrangements; whether they concurred in them; and what exactly these arrangements are.

Mr. Bevin: Neither the British nor, so far as I am aware, the United States representatives in Budapest were consulted before Marshal Voroshiloff made recommendations to the Hungarian Political Parties concerning electoral procedure. The British and United States representatives did not concur in these recommendations, which were described in my reply on 24th October to the hon. Member for The High Peak (Mr. Molson).

Brigadier Maclean: If the representative is not consulted on matters of such importance, what functions does he fulfil?

Mr. Bevin: As many functions are being carried out and there is a change in the treatment of the Allied Control Commission, it is very difficult; but I am quite satisfied that as we persist many of these suspicions will be removed and it will function much better than it has.

Oral Answers to Questions — PERSIA (ALLIED TROOPS)

Mr. Cuthbert: asked the Secretary of State for Foreign Affairs the number of Allied troops and auxiliaries left in Teheran, Persia.

Mr. Bevin: I understand that the bulk of Allied troops have been withdrawn


from Teheran. I have, however, no exact figures as to the totals which remain. As far as we are concerned, our withdrawal from Teheran has been completed except for a party of administrative personnel numbering 84, who are dealing with such subjects as claims and the disposal of assets. These will be withdrawn as soon as these matters are settled and in any case we have agreed to withdraw from Persia not later than 2nd March, 1946.

Mr. Pickthorn: Does "in any case" mean whatever is being done by other Powers?

Mr. Bevin: I have no right to be suspicious towards other Powers. They have agreed to carry out their Treaties, and I am not going to infer that they are not going to do so.

Captain Prescott: What does the Foreign Secretary mean by "as far as we are concerned"?

Mr. Bevin: I do not know the exact numbers left there. I was asked for the numbers. I have been able to state that, as far as we are concerned, 84 administrative people have been left to clear up the claims. I do not know if there are 84 Russians or Americans. I cannot give the hon. and gallant Member the precise numbers.

Oral Answers to Questions — GREECE (SITUATION)

Brigadier Fitzroy Maclean: asked the Secretary of State for Foreign Affairs whether he will make a statement regarding the present political situation in Greece.

Mr. Bevin: The Regent continues to act as Prime Minister. I regret to say that all His Beatitude's efforts to persuade the political parties to set up a stable government have so far proved unsuccessful. As a result of this continued uncertainty, improvement in the social and economic situation is delayed.

Oral Answers to Questions — RASHID ALI GAILANI

Mr. Keeling: asked the Secretary of State for Foreign Affairs whether his investigations have satisfied him that Rashid Ali Gailani on his escape from Germany entered Syria without the knowledge of the French authorities.

Mr. Bevin: I have as yet no definite information on this subject, but investigations are proceeding.

Oral Answers to Questions — CHINA (BRITISH INTERESTS)

Mr. Walter Fletcher: asked the Secretary of State for Foreign Affairs what form of administration will now take the place of the previous International Settlement in Shanghai and other treaty ports; and what steps he is taking to protect British interests and property in China jeopardised by the absence of British personnel.

Mr. Bevin: The transfer of the administration of the International Settlement at Shanghai and other areas previously controlled by foreign municipal bodies in China is now under consideration with the Chinese Government. No decision has yet been reached regarding the eventual forms of administration. As regards the second part of the Question, His Majesty's Ambassador at Chungking, following our representations on this subject, was informed on 27th September that the Chinese military headquarters had been asked to ensure that effective measures are taken to protect Allied property rights and interests in China.

Mr. Fletcher: While thanking the right hon. Gentleman for his reply, may I ask if he would further impress on the Chinese Government, through the Ambassador, the necessity for avoiding various incidents in which property of British nations has suffered considerably?

Mr. Bevin: indicated assent

Captain Gammans: asked the Secretary of State for Foreign Affairs how many applications have been received from British business firms for permission to return to Shanghai; how many visas have been granted, and how many have actually arrived in Shanghai; and why special facilities have been granted by the Chinese Government to American business interests which have been denied to British firms.

Mr. Bevin: About 60 applications to return to Shanghai have been received from representatives of British business firms. Ten British business men are known definitely to have arrived at Shanghai from Chungking. Steps are being taken to arrange early air and sea


passages to China for the remainder of the applicants. The hon. Member is, no doubt, aware that there are also at Shanghai a large number of British subjects, the majority of them business men, who have been released from internment there. I do not yet know precisely how many visas have been granted for Shanghai. His Majesty's Ambassador at Chungking, however, has reported that no difficulties are now being met with in obtaining permits there for British business men to travel to Shanghai and elsewhere in liberated China. I have no reason to suppose that the discrimination alleged in the last part of the Question exists in fact.

Captain Gammans: Is the right hon. Gentleman aware that a large number of British business houses appear to have been requisitioned by the Chinese, and does he not think that every facility should be given to our people to go back and take up their business interests?

Mr. Bevin: In the course of the war the British Government requisitioned a lot of businesses in London. One cannot get them all released in a moment.

Captain Gammans: asked the Secretary of State for Foreign Affairs if any agreement has yet been reached with regard to the future status, employment and pension rights of former British employees of the Shanghai municipality.

Mr. Bevin: No, Sir, not yet. But His Majesty's Ambassador at Chungking has taken up with the Chinese Government the question of the latter's obligations under the terms of the Service Agreements of British employees of the former Shanghai Municipal Council.

Captain Gammans: Is the right hon. Gentleman aware that these employees are now reaching this country, that they have nothing whatever on which to live and that unless the British Government accept the moral obligation that rests upon them to help these people they will become completely destitute?

Mr. Bevin: I should have thought that my answer did accept the moral obligation to help.

Air-Commodore Harvey: asked the Secretary of State for Foreign Affairs what arrangements are being made to enable this country to play its part in the rehabililtation of China and territories until recently occupied by the Japanese and to ensure that proper facilities are being provided for the immediate opening up of the normal channels through which reciprocal trade would flow.

Mr. Bevin: U.N.R.R.A., of which His Majesty's Government is a member making substantial contributions, is responsible for relief in China. At present His Majesty's Government is making the necessary arrangements for relief and rehabilitation supplies for the British territories in the Far East. The French and Dutch Governments are responsible for the provision of supplies to their areas. As regards the second part of the Question, I would refer the hon. Member to the answer given by my right hon. Friend the President of the Board of Trade to the hon. Member for Western Dorset (Major Digby) on 29th October.

Air-Commodore Harvey: asked the Secretary of State for Foreign Affairs the number of British Consulates now operating in China; and the number of British Trade Commissioners attached to the Consulates.

Mr. Bevin: Six posts are at present operating, namely, Chungking, Shanghai, Kunming, Foochow, Kashgar and Tihwa. Canton and Tientsin are likely to reopen at any moment and it is also hoped to make arrangements for the early reopening of Tsingtao. British Trade Commissioners are appointed to British territory only. There is, however, a Commercial Counsellor at Chungking, and he has opened an office at Shanghai.

Air-Commodore Harvey: Is the right hon. Gentleman aware that the Americans have trade commissioners attached to their Consulates in the interior of China? Could we not follow suit so that we may be enabled to compete with the Americans?

Mr. Bevin: I would like to have separate notice of a question of that sort, but I will say that the less we divide Consulates the better, in my view. I am in favour of developing the Consulate services on a high and efficient basis.

Oral Answers to Questions — WAR DAMAGE, FAR EAST (BRITISH CLAIMS)

Mr. Walter Fletcher: asked the Secretary of State for Foreign Affairs whether he will ensure that in reference to claims for war damage in the Far East the claims of other Allied Governments are not given preference; that British claimants have proper access to all sources of Government information that may assist them in making their claims; and that where goods formerly the property of British nationals are found to be in Japanese possession, the claimants will not be prevented from recovering them, or from recovering their equivalent value if they have been taken over and disposed of by His Majesty's Government or Allied Governments.

Mr. Bevin: The question of claims against the Japanese Government for compensation for war damage in the Far East is at present under consideration, and it is hoped that some inter-Allied machinery will shortly be set up for the purpose. The hon. Member may rest assured that His Majesty's Government will press for a settlement of all claims on an equitable basis. We will give every assistance to British claimants in prosecuting their inquiries and making their claims.

Mr. Fletcher: Is the right hon. Gentleman aware that this is really more a case of goods found in Japan being removed by Allies, particularly the United States, and will he impress on the United States Government that they should keep some form of tally so that claims can be authenticated later?

Mr. Bevin: I will follow that up.

Oral Answers to Questions — UNITED STATES MISSION TO EUROPE (REPORT)

Major Guy Lloyd: asked the Secretary of State for Foreign Affairs (1) whether he will ask for a copy of the report of the deputation from the House of Representatives in the U.S.A., on their visit to Poland, Czechoslovakia and Austria, and place it in the Library of the House of Commons, in order that Members may acquaint themselves with its contents;
(2) whether he is aware that a deputation from the House of Representatives in the U.S.A. has recently returned from a visit to Poland. Czechoslovakia and

Austria, and is presenting a full report to the American Congress; and if he will make arrangements for the dispatch of a similar Parliamentary Commission at an early date.

Mr. Bevin: I understand that the Sub-Committee of the Foreign Affairs Committee of the United States House of Representatives which visited Poland, Czechoslovakia and Austria two months ago is to make its official report to the Foreign Affairs Committee shortly in closed session. It will be for the Committee to decide if the report or any part of it should be made public. If it is, I shall gladly arrange for a copy to be placed in the Library of the House. As regards a similar visit by Members of Parliament, if the House has any proposals to make and desires my help in arranging such a visit, I shall, of course, be glad to consider in what way I can be of assistance.

Oral Answers to Questions — RUMANIA (BRITISH-OWNED OILFIELDS)

Squadron-Leader Donner: asked the Secretary of State for Foreign Affairs whether he will publish the report, or reports, of the British Missions on the condition of, and situation in, the British-owned oilfields in Rumania.

Mr. Bevin: I have not received a complete report but a number of despatches. I do not think any useful purpose would be served by publication.

Squadron-Leader Donner: Is the House to understand from that answer that reports will not be published?

Mr. Bevin: No, Sir. One is not to understand that, but it would be most unfortunate if I began publishing des patches without waiting for a complete report.

Oral Answers to Questions — DANZIG (STATUS)

Mr. Pickthorn: asked the Secretary of State for Foreign Affairs what is now the international status of Danzig; whether it is still a State under Articles 100–108 of the Treaty of Versailles; or when and by what juridical process it ceased to be a State.

Mr. Bevin: The juridical position of the free city of Danzig is, in the view of


His Majesty's Government, unchanged, and will remain so until it is re-determined at the Peace Settlement. The position of Danzig de facto is, as the House is aware, that it was placed under the administration of the Polish State by agreement between His Majesty's Government, the United States Government and the Soviet Government at the Potsdam Conference.

Mr. Pickthorn: In that case, can the right hon. Gentleman tell us what is the nationality of the inhabitants of Danzig; and whether, for purposes of deportation and so on, they are treated as Germans, or what?

Mr. Bevin: I would like notice of that Question.

Oral Answers to Questions — BRITISH NEWSPAPER CORRESPONDENTS (EUROPEAN COUNTRIES)

Squadron-Leader Donner: asked the Secretary of State for Foreign Affairs whether the Russian assurance of the freedom of newspaper correspondents in Rumania applies to other countries; and whether the effective freedom of British correspondents in all European countries is now assured.

Mr. Bevin: The assurance given by M. Molotov to the Council of Foreign Ministers that the despatches of newspaper correspondents would not be subjected to censorship applied only to Rumania. The principle which it embodies, however—that of freedom of reporting—is honoured in most European countries now. I cannot say that the effective freedom of British correspondents is assured in all European countries. I have not, however, received any recent complaints from British journalists about restrictions on their activities. I am trying to obtain confirmation of a recent report that censorship of messages dealing with foreign affairs is to be introduced in Bulgaria.

Sir T. Moore: The right hon. Gentleman said "most countries." Will he kindly indicate which countries do not subscribe to these restrictions?

Mr. Bevin: I am afraid that in Europe it is liable to vary, sometimes from day to day.

Mr. Austin: Is it not a fact that the censorship is most severe in countries like Spain and Portugal?

Oral Answers to Questions — WORLD PEACE (PRESIDENT TRUMAN'S STATEMENT)

Mr. Peter Freeman: asked the Secretary of State for Foreign Affairs whether His Majesty's Government accept the 12 points recently made by Mr. Truman for the maintenance of world peace.

Mr. Bevin: Yes, Sir.

Mr. Eden: Would the right hon. Gentleman agree that American participation in world affairs on the lines set out in those 12 points, will be a most valuable contribution to the maintenance of peace?

Mr. Bevin: Yes, Sir, the more it becomes effective.

Oral Answers to Questions — AUSTRIA

States (Representation)

Mr. Anthony Nutting: asked the Secretary of State for Foreign Affairs what States have at the present time fully accredited diplomatic representatives in Vienna; and what States have non-diplomatic representatives.

Mr. Bevin: At the present time no country has diplomatic representatives in Vienna. In regard to the second part of the question, I understand that there are unofficial bodies in Vienna claiming to represent certain national interests, but none of these enjoys any form of recognition by His Majesty's Government or, so far as I am aware, by any of the other three Controlling Powers.

British Press Representatives

Mr. J. Langford-Holt: asked the Chancellor of the Duchy of Lancaster, how many British Press representatives there are at present in Austria.

The Chancellor of the Duchy of Lancaster (Mr. John Hynd): I would refer the hon. Member to the reply given by the Minister of State on 17th October, in which he stated that, according to the latest information, there were then six British correspondents in Austria. So far as I am aware, the position has not changed appreciably in the meantime


although the situation is rendered somewhat fluid by the fact that Press correspondents arein a habit of moving in and out at short notice in transit for other countries.

Mr, Langford-Holt: Can the hon. Gentleman assure the House that the despatches forwarded by the Press correspondents are uncensored?

Mr. Hynd: I think I am in a position to give that assurance, but if the hon. Member has any information which would suggest that it is not correct, perhaps he will let me have it.

Mr. Pickthorn: Could we be told what Press correspondents do to make a situation fluid?

Mr. Hynd: I do not propose to take advantage of the opportunity afforded by that question, but the fact is that they occupy aeroplane space, and move from point to point.

Economic Reconstruction

Mr. Anthony Nutting: asked the Chancellor of the Duchy of Lancaster whether, in order to make a reality of the 1943 Moscow Conference declaration on future Austrian independence, any steps are being taken by His Majesty's Government to urge the Soviet Government to stop creating inflation in Austria and to co-operate with His Majesty's Government and the U.S. Government in the rebuilding of Austrian economy.

Mr. John Hynd: The re-creation of the Austrian economy in accordance with the Moscow Declaration and the prevention of inflation in Austria are matters to which His Majesty's Government attach great importance. The British representative on the Allied Council for Austria is fully instructed as to the views of His Majesty's Government in these matters, which have also been conveyed by His Majesty's Representative in Moscow to the Soviet Government.

Mr. Nutting: In view of the fact that the buck has been passed back to the hon. Gentleman by the Foreign Secretary in this little hangover from last week's Question Time, will he bear in mind that it was economic rather than political reasons which were the main cause for Austria being drawn into Hitler's orbit in 1938, thereby consolidating Germany's position for a world war; and will he do

everything in his power to secure that Britain and other nations responsible do their utmost to rebuild Austrian prosperity?

Mr. Hynd: The buck has not been passed. The question of inflation was raised as part of an omnibus supplementary asked last week which involved other matters. That question is being dealt with by the Control Commission, and, as I mentioned, it is being pressed by our representatives on the Commission in accordance with our policy that Austria should be dealt with as an economic unit.

Oral Answers to Questions — ROYAL NAVY

Small Craft (Dismantling)

Mr. Boothby: asked the First Lord of the Admiralty whether he is aware that the construction and armament is now being completed for his Department of a number of small craft which are then immediately dispatched to another port to be dismantled; and whether he will take steps to stop this waste of public money.
The First Lord of the Admiralty (Mr. A. V. Alexander): I do not know of any small craft now being completed and despatched to another port to be dismantled, but shortly after V.J. Day some motor fishing vessels would have left the builders' works with their armament of an Oerlikon gun and two machine guns in place, and they would be disarmed at their port of destination. These motor fishing vessels in their disarmed condition are being used for various essential services.

Mr. Boothby: Would the right hon. Gentleman give an assurance that those who can be released to the fishing industry will be released for that purpose at the earliest possible moment?

Mr. Alexander: We are doing our very best but, with regard to requisitioned drifters and motor fishing vessels, we have released 75 per cent. of those we requisitioned.

Fishing Vessels (Release)

Mr. Boothby: asked the First Lord of the Admiralty whether he is aware that 12 trawlers are now tied up and deteriorating at King's Lynn; and if he will release these boats at the earliest opportunity.

Mr. Alexander: Only nine of these vessels are trawlers, the others being yachts. Of the trawlers one is Dutch, and another a German prize. The disposal of both of these vessels is being negotiated with the appropriate authorities. The rest are British and were built between 1905 and 1918 and could only be converted for fishing at the expense of more modern and efficient vessels. Arrangements are being made to dispose of two of the yachts, the third is being used to accommodate the shipkeepers.

Mr. J. J. Robertson: asked the First Lord of the Admiralty if he is aware that a considerable number of ex-Servicemen are unemployed in Scotland, due to delay in the derequisitioning of former fishing boats; and what steps he proposes to take to expedite the release of these vessels, in order to ensure a speedy rehabilitation of demobilised fishermen, and thereby assist materially in augmenting the country's food supplies before the winter.

Mr. Alexander: Three hundred and twenty-two Scottish fishing boats comprising 168 drifters and 154 motor fishing vessels have been released from Naval service up to 19th October, 1945. Sixty-five drifters and 33 motor fishing vessels remain on Naval service. It is expected that the majority of these will have been released by the end of 1945.

R.N.V.R.

Commander Douglas Marshall: asked the First Lord of the Admiralty what steps are being taken to establish the permanent R.N.V.R., in order that surplus modern equipment and diesel ships may be utilised.

Mr. Alexander: The constitution of the permanent R.N.V.R. is still under consideration. The hon. and gallant Member may rest assured that sufficient modern equipment and ships will be available for training purposes when a decision on the future of the Reserve has been taken.

Commander Marshall: Will the Minister bear in mind the fact that a large number of officers have already volunteered for this service, and take that into consideration when he is looking into the subject; and consider the re-establishment of the R.N.V.S.R.?

Mr. Alexander: I will take note of that point.

Reserve Officers (Civilian Employment)

Commander Douglas Marshall: asked the first Lord of the Admiralty if he will consider the setting up of an organisation manned by Reserve officers to help with the problems of Reserve officers when demobilised in obtaining suitable employment.

Mr. Alexander: No, Sir. This is the responsibility of my right hon. Friend the Minister of Labour and National Service, with whose Ministry the Admiralty maintains the closest contact through the naval officers attached to the Appointments Department.

Demobilisation

Mr. Maclay: asked the First Lord of the Admiralty what disparity in de mobilisation group numbers now exists between sick berth attendants and other specialised ratings in His Majesty's Navy.

Mr. Alexander: Sick berth ratings, in common with the regulating, writer and stores branches, are scheduled to reach Group 25 by the end of this year. Ratings in the engine room and stoker branches are one group better off, whilst Seaman Chief Petty Officers and Petty Officers, together with cook and steward ratings are due to reach Group 27 by the same date.

Sir T. Moore: In view of the sturdy health of His Majesty's naval forces, would the right hon. Gentleman not take steps to get these sickbay attendants released without further delay, as they are wasting their time?

Mr. Alexander: I think my advisers know more about that subject than does the hon. and gallant Member.

Lieut.-Colonel Byers: asked the First Lord of the Admiralty whether he will ensure that A/B P.J.X. 631934 Wilson, J., whose embarkation leave is due to end on 31st October, is not dispatched overseas while his application for a Class B release, initiated in September, is being considered; and whether, in conjunction with the Minister of Works, he will hasten the investigation of this case which has been outstanding for some time.

Mr. Alexander: Block releases in Class B are made strictly in order of age and service groups. Wilson was very young when he joined the Royal Navy and has served for only a short period. He will


not, therefore, be eligible for release in Class B until his age and service group is reached.

Mr. Touche: asked the First Lord of the Admiralty whether he has any statement to make regarding the deferment in demobilising officers of the supply and secretarial branch of the Royal Navy.

Mr. Alexander: The reply to this Question is unavoidably lengthy. I will, therefore, with the hon. Member's permission, circulate the answer in the OFFICIAL REPORT.
Following is the answer:
The reason for the rate of release of the Supply and Secretariat Branch of the Royal Navy being slower than the average is that this Branch is now having to shoulder additional work in connection with the closing down of establishments and the administration of the release schemes. In order to ease the burden which it was foreseen would fall upon this branch, the entries have been increased as much as possible and redundant officers of other branches are being trained in these duties. As a result of these measures, the prospect of release of the Supply and Secretariat Branch has been slightly improved and it is hoped to release Group 16 by the end of the year.
There is, however, a number of older warrant officers who have been promoted from the permanent lower deck service and who are practically all in the earlier age and service groups. Their release is unavoidably deferred but it is hoped to release nearly all of them before June next year with the exception of course of any who volunteer to stay.

W.R.N.S.

Mr. McKie: asked the First Lord of the Admiralty the present strength of the W.R.N.S.; and how this compares with the figure of the month immediately preceding the termination of hostilities in Europe.

Mr. Alexander: The present strength of the W.R.N.S. is 60,500, which is a reduction of 18 per cent. on the strength on the 30th April.

Major Guy Lloyd: Is it not a fact that a very large number of these young women are sitting about browned off,

with little or nothing to do? Could not their release be expedited?

Mr. Alexander: On the contrary, the Women's Royal Naval Service are doing a most valuable part of demobilisation work. We are very short of male writer and supply ratings, and without the help of the W.R.N.S. we could not get through the job.

Engineer Officers

Mr. Edelman: asked the First Lord of the Admiralty whether, in view of the shortage of engineer officers in the Royal Navy and of the high standard of all candidates at this year's examinations, he will increase the number of appointments to the rank of warrant-engineer by the inclusion of those who reached a percentage of over 75 per cent. in the recent examinations.

Mr. Alexander: No, Sir. The proportion of Warrant-Engineers to the Keyham trained engineers in the Engineering Branch of the Royal Navy is carefully calculated to meet the requirements of the Fleet. The Warrant-Engineer lacks the long scientific training of the Keyham man and is not therefore generally interchangeable with men trained under the Keyham scheme.

Oral Answers to Questions — EQUAL PAY (ROYAL COMMISSION'S REPORT)

Flight-Lieutenant Beswick: asked the Prime Minister when the Government will be in a position to publish the Report of the Royal Commission appointed to consider the principle of equal pay for equal work.

The Prime Minister (Mr. Attlee): The Royal Commission has not reported. It is still taking evidence.

Oral Answers to Questions — REQUISITIONED DWELLING-HOUSES (RELEASE)

Lieut.-Colonel Dower: asked the Prime Minister if he will give instructions that in future, when requisitioned dwelling-houses are no longer required by the Department or authority for whom they were requisitioned, they will not be offered to other Departments and authorities before being derequisitioned.

The Prime Minister: No, Sir. I consider that the present policy should be maintained by which all requisitioned


houses of the smaller type, when vacated by Government Departments, are made available to local authorities so that they may be used to the fullest possible advantage to the community. Large requisitioned houses when they are vacated by one Government Department are considered for housing other Government Departments to ensure their most advantageous use. Every endeavour is made, however, to release houses required for the personal occupation of those who owned them at the time of requisition.

Lieut.-Colonel Dower: Does not the right hon. Gentleman think that the acute housing shortage will persist while houses are hawked about from Department to Department and small houses are maintained empty for a long period?

Mr. Attlee: I do not think they are "hawked about"—[Hon. Members: "Yes, they are"]—but if the hon. and gallant Member knows of small houses being held for a long time by a Department, perhaps he will put down a question to the Department concerned.

Oral Answers to Questions — GERMANY

Hamburg (Rebuilding)

Mr. Medland: asked the Chancellor of the Duchy of Lancaster how many architects, civil and mechanical engineers have been recruited for the rebuilding of Hamburg; and the salaries offered for these professional services.

Mr. John Hynd: I am having inquiries made and will communicate with the hon. Member.

Land Redistribution

Mr. Pickthorn: asked the Chancellor of the Duchy of Lancaster what is happening in Eastern Germany as regards the redistribution of land.

Mr. J. Hynd: Reports have been received to the effect that a land reform scheme has been introduced in Saxony, Thuringia and Mecklenburg. Under this scheme the land property of active Nazis and war criminals is being confiscated; also all inherited property of over 100 hectares. No compensation is being paid. The confiscated land is being redistributed in lots of five to 10 hectares to agricultural workers, small tenant farmers and refugees.

Mr. Pickthorn: Can the hon. Gentleman tell us under what principle or provision of international law it is the right or duty of an occupying Power to change social and economic arrangements in this way?

Mr. Hynd: The administration of Germany is under the control of the Allied Control Commission. In the individual zones, certain steps are taken, generally by agreement on the Control Council. In this case the action was taken by a German administration set up bythe Russians in their zone.

Refugees and Displaced Persons

Miss Rathbone: asked the Chancellor of the Duchy of Lancaster, whether he has considered the announcement of Herr Schlaffer, Director of Refugees and Displaced Persons in the Russian zone of Germany, to the effect that an agreement was reached on 15th October for orderly transfer of refugees from Czechoslovakia, Poland and Hungary, at the rate of 28,000 daily; the future arrivals to total 4,500,000, 2,500,000 from Czechoslovakia, 1,500,000 from Poland and 500,000 from Hungary and, as the proposed transfer during the winter months may precipitate widespread starvation, what action does His Majesty's Government propose to take; and whether the transfer was agreed to by the British authorities in Germany.

Mr. John Hynd: I have no knowledge of the announcement referred to other than has appeared in the Press, but inquiries are being made.

Major Tufton Beamish: asked the Chancellor of the Duchy of Lancaster how many refugees, other than those returning to their own homes, have entered the British zone in Germany during the last three months from the Russian, American and French zones, respectively; what is the approximate daily average of entries from each of these zones since 1st October, 1945; and what arrangements have been made with the three Governments concerned to put an end to any further large influx of such refugees.

Mr. John Hynd: It has not been possible in the time available to obtain the statistical information asked for but inquiries are being made. It will be appreciated that in the conditions existing in Germany today it is difficult com


pletely to control the unauthorized movement of refugees, but I can assure the hon. Member that our representatives on the Allied Control Commission are fully alive to the situation.

Major Beamish: What positive action is being taken to reach agreement with the Soviet Government concerning this? Is the hon. Gentleman aware that there has been an average daily influx of some 10,000 Germans from the Russian zone to the area of Hanover over the past four weeks?

Mr. Hynd: I am aware that there has been a large influx of refugees into the Hanover zone, to our zone in Berlin and to other parts of our zone in Germany, but, as stated in my answer, this matter is being dealt with by the Allied Control Commission in Germany and our representatives axe doing everything possible to secure some arrangement to lead to the control of some of these un authorised movements.

Earl Winterton: In view of the poignancy and extreme danger of this problem is it not highly desirable that, with the approval of the Allied Governments, the hon. Gentleman or some Cabinet Minister from this country, should go there to investigate and see whether a stoppage cannot be made to this traffic before it ends in a major disaster?

Mr. Hynd: I want to assure my Noble Friend that I have already visited Germany to make personal investigations into this and other matters. Other visits will be made to keep touch with the situation, and we are closely in touch with our representatives on the Allied Control Commission.

Miss Rathbone: Will not a too rigid prevention of refugees entering our zone mean that they will be allowed to starve in the Russian zone?

Mr. Hynd: Rigid prevention is impossible. The man-power position makes it impossible, but everything that is possible in present circumstances is being done.

Oral Answers to Questions — OCCUPIED EUROPE (CURRENCY STABILISATION)

Mr. Peter Freeman: asked the Chancellor of the Duchy of Lancaster what steps are being taken to stabilise the

currencies of countries under Allied control.

Mr. John Hynd: If, as I assume, my hon. Friend is referring to Germany and Austria, the objective of a stable currency is one to which His Majesty's Government attaches importance. In the case of Austria, difficulties have arisen in obtaining the necessary quadripartite decisions but it is hoped that the difficulties will shortly be overcome.

Oral Answers to Questions — FOOD SUPPLIES

Vegetables

Mr. J. J. Robertson: asked the Minister of Food if he is aware that vegetables grown in the East Lothian area in Scotland and now surplus to market requirements are likely to be ploughed back into the ground; what immediate steps he proposes to take to avoid this waste; and if he will consider the establishment of de hydrating facilities for market garden produce in this part of Scotland.

The Minister of Food (Sir Benjamin Smith): I am aware that some cabbage is available in excess of present requirements in the East Lothians as in other producing areas. I regret that so far as the crop exceeds the total demands of consumers and of the processing plant, it may have to be used for stock feeding or be ploughed in as green manure. The reply to the last part of the Question is "No, Sir."

Pigeons (Feeding Stuffs)

Mr. Maclay: asked the Minister of Food how soon it will be possible to issue food coupons to pigeon fanciers other than those who are members of the National Pigeon Service.

Major Niall Macpherson: asked the Minister of Food whether, in view of the fact that pigeon fancying and racing form a principal hobby of miners in remote parts of the country, as well as of the usefulness of pigeons for communicating purposes in an emergency, he will extend the ration of pigeon food now allowed to members of the National Pigeon Service and to other members of pigeon clubs.

Sir B. Smith: I am afraid that there is no immediate prospect of rations being made available for pigeon fanciers other than those who are members of the National Pigeon Service.

Mr. Maclay: While appreciating the right hon. Gentleman's possible difficulties in this matter, may I ask if it is the case that much more generous treatment is given to greyhounds and other animals which race, and does he not think that if this is so, comparable treatment might be given to persons who go in for pigeon racing?

Sir B. Smith: I am not competent to give an answer with regard to greyhounds. It already takes 6,200 tons of food to supply the birds covered by the National Pigeon Service, and on the pre-war estimate of 2,500,000 birds it would need 45,000 tons to maintain them.

Mr. Vernon Bartlett: Will the right hon. Gentleman do his best to keep the dove of peace alive?

Sugar (Shipments to France)

Mr. Charles White: asked the Minister of Food whether he is aware of the reluctance of farmers to maintain the war-time acreages of sugar beet, believing that the recent shipments of sugar to France do not indicate any shortage here; and whether he has any statement to make on the matter.

Sir B. Smith: The feeling to which my hon. Friend refers is based on a misapprehension. The recent shipments of sugar to France were by way of loan and are being repaid out of allocations made to France by the Combined Food Board. On the best estimate that can be made, world supplies of sugar in 1946will be no more than sufficient to maintain the present rates of world consumption. Home production from war-time acreages has provided this country with about 30 per cent. of its total requirements. In view of the world supply outlook it would be premature to contemplate a reduction in sugar beet acreage.

Grain Storage, Norfolk

Mr. Dye: asked the Minister of Food whether he is aware of the difficulties in Norfolk since harvest in the storing and transport of grain; whether he has been able to obtain additional storage facilities from the Air Ministry; and whether he is making ample arrangements for next year's grain crops by acquiring the use of hangars and equip ping them where necessary with drying apparatus.

Sir B. Smith: As regards the first and second parts of the Question, sufficient storage space has so far been secured during the present season to enable forwarding instruction to be given to sellers of home-grown grain. Such difficulties in moving grain as have arisen were due rather to transport problems than to shortage of storage accommodation. Every effort is being made to overcome these transport difficulties. As regards the last part of the Question, consideration is at present being given to the arrangements for storage of grain from the crops to be harvested in 1946.

Eggs and Poultry

Mr. Collins: asked the Minister of Food whether he is aware that the black market in eggs and poultry has consider ably increased and that his enforcement officers find it almost impossible to enforce the various price orders; and what steps he proposes to take to combat this evil and to ensure fair distribution of the limited supplies available.

Sir B. Smith: The answer to the first part of the Question is "No, Sir." As regards eggs, the present Regulations provide for the equitable distribution of the available supplies, and in the enforcement of those Regulations satisfactory results have been and are being obtained. As regards poultry, I would refer my hon. Friend to the reply given on 29th October to the hon. and gallant Member for Hertford (Lieut.-Colonel Walker-Smith).

Mr. Collins: Is my right hon. Friend aware that the answer he has given is not in accordance with the general opinion among the farming community?

Sir B. Smith: I am not here to bolster up the opinion of any particular or peculiar section in the country. I have given a statement of the facts as I find them.

Meat Trade Employees (Class B Releases)

Mr. Royle: asked the Minister of Food whether he is aware that the Manchester and Salford Meat Traders' Association asked for the support of the divisional food officer in regard to 50 applications for Class B release and that in each case they were informed that they had no claim, being distributors not producers; and will he cause clear instructions to be issued to the divisional food officer.

Sir B. Smith: I am informed that of 48 cases put forward by this association seven were sponsored by the divisional food officer on industrial grounds, and some of these men are already back in their occupations. I think that the instructions issued to the divisional food officer in this matter are adequate.

Retail Shops (Re-opening)

Major Guy Lloyd: asked the Minister of Food how many food-retailing shops have been re-opened under the scheme announced by his Ministry last July; and what is the total number of applicants to re-open at present on the register kept by Food Control Committees.

Sir B. Smith: During the period 16th July, 1945, to 15th September, 1945, 892 retail licences were granted to returning ex-traders to re-open businesses which they closed because of the war. I regret that the information requested in the latter part of the Question is not available.

Lieut.-Colonel Dower: Cannot the Minister increase it; is not 892 a very small number?

Sir B. Smith: My Divisional Food Officers are of course always susceptible to inquiries.

Lieut.-Colonel Dower: That is very kind of them.

Mr. De la Bère: I want them to do more.

Gas Workers (Cheese Ration)

Mr. Attewell: asked the Minister of Food whether he will consider the granting of the special cheese ration to stokers in the gas industry where the number of such workers is small and the employer makes no provision for canteen facilities, as in the case of the gas company at Market Harborough, Leicestershire.

Sir B. Smith: No, Sir. I am advised that in general it should be possible for the gas industry to provide canteens or packed meals for its employees. I regret that I cannot see my way to make special arrangements for workers at individual plants where the employer does not make such provision.

Mr. Attewell: Does the right hon. Gentleman realise that many of these men

live in the surrounding villages and that their shifts extend over a seven-day week, so that when the employer does not provide a canteen great hardship is inflicted upon a very fine body of men?

Sir B. Smith: The obvious reply to that is that they can get packed meals whatever their working days are. It is quite impossible for me to put in an organisation to meet every request from every quarter.

Imports and Exports

Colonel Erroll: asked the Minister of Food whether he will issue a comprehensive statement on the quantities of food being received in this country from overseas at the present time; the quantities stored; and the quantities being exported to ex-enemy territories and former occupied territories in Europe.

Sir B. Smith: I regret that I am not able to give details of imports and exports of food other than those which are given in the accounts relating to the trade of the United Kingdom issued periodically by the Board of Trade. I do not propose to disclose the levels of stocks of food held in this country.

Colonel Erroll: Could the right hon. Gentleman make a statement of the amount of food we are exporting to Europe at the present time, as considerable disquiet exists on that subject?

Sir B. Smith: That will appear in the documents to which I have already referred the hon. Member.

Short Weight (Complaints)

Mr. Daines: asked the Minister of Food whether he will take steps to safeguard retailers against short weight by wholesalers; and whether he is aware of the prevalence of this practice during recent months.

Sir B. Smith: Complaints by retailers of short weight supplies by wholesalers have been confined almost exclusively to the fresh fruit and vegetable trade; they have not increased during recent months. My officers are always prepared to investigate any such complaints and to take suitable action, but experience has shown that it is most difficult to secure evidence in this type of case owing to the reluctance of the retailer to give information or evidence. I am however looking into this matter.

Mr. C. S. Taylor: Does the right hon. Gentleman realise that the retailer is reluctant to give this information for fear of being black-listed by the wholesalers?

Sir B. Smith: That does not reflect the sturdy independence we expect from a Britisher.

Orange Juice

Mr. Vernon Bartlett: asked the Minister of Food why orange juice is not made available for children over five years of age who have been released from Japanese prison camps.

Sir B. Smith: I am advised that children over five years of age obtain an adequate supply of Vitamin C from their ordinary diet. Where, for any reason, this does not apply, rose hip syrup, blackcurrant puree and synthetic Vitamin C tablets are available.

Mr. Maxton: Has the Minister ever tried any of these things?

Sir B. Smith: Yes, Sir. I have tried them. I think they are excellent as a hot drink in the winter.

Turkey Supplies, Blackburn

Mrs. Castle: asked the Minister of Food whether he is aware that the Blackburn Co-operative Society has had no allocation of British, Northern Ireland or imported turkeys during the whole period of controlled distribution; and whether, in view of the fact the Society had a large sale of Northern Ireland turkeys before the war, he will take steps to see that they receive an allocation this Christmas.

Sir B. Smith: I understand that the Blackburn Co-operative Society received a small number of imported turkeys last year from the Co-operative Wholesale Society, and that a similar supply will be provided again this year. I do not control the distribution of home-produced turkeys and it would not be practicable to increase the number of towns receiving Northern Irish supplies by the inclusion of Blackburn.

Mrs. Castle: Is the Minister aware that the allocation made last year amounted to one dozen turkeys among 20,000 customers, and is he satisfied with the allocation of Northern Ireland turkeys to the eight big towns of this country, leaving out the smaller towns which have equal rights to enjoy this elusive delicacy?

Sir B. Smith: I can only repeat that the allocation is made by the Co-operative Wholesale Society, from which Blackburn gets its allocation. On the other hand, I have agreed, in an endeavour to attract turkeys to towns such as this, that home-produced turkeys can be sold at 2d. per lb. more.

Squadron-Leader Sir Gifford Fox: Is this "Socialism in our time"?

Sir B. Smith: Yes, Sir.

Oral Answers to Questions — CARPET FACTORY, CREETOWN (LICENCE)

Mr. McKie: asked the President of the Board of Trade the reason for the refusal of his Department to grant a licence for the establishment of the proposed carpet factory at Creetown, Kirkcudbrightshire.

The Parliamentary Secretary to the Board of Trade (Mr. Ellis Smith): I am looking into his matter and will write to the hon. Member as soon as possible.

Mr. McKie: Is the hon. Gentleman aware that this refusal caused widespread dissatisfaction amongst a number of people who had confidently looked forward to this industry being established; and will he convey this to the right hon. Gentleman and ask him to reconsider it?

Mr. Ellis Smith: We are quite aware of that. We have sent an urgent message to the Regional Controller.

Oral Answers to Questions — CHAMPAGNE (IMPORTATION)

Miss Rathbone: asked the Minister of Food what quantity of champagne has recently been or is about to be imported into this country; how much ship space it will occupy; and whether arrangements will be made to ensure that this wine shall be used only for the benefit of patients requiring stimulants, regardless of means.

Sir B. Smith: The net weight of champagne which will be imported from France by the trade is 435 tons; the gross weight is approximately 1,600 tons. 85,000 cubic feet of shipping space will be employed, but the wine will not be shipped at the expense of any commodity of greater importance. I am afraid that it would not be practicable to adopt the suggestion made by the hon. Member in the last part of her Question.

Miss Rathbone: Is it not anomalous that a Socialist Government should facilitate the import of this costly luxury at a time when shipping is scarce and when, even in this country, thousands are under nourished, and in Europe—

Hon. Members: Speech.

Mr. Speaker: rose—

Sir T. Moore: Has the right hon. Gentleman tested any of these beverages?

Miss Rathbone: Am I not to have a reply to my supplementary question?

Mr. Speaker: The hon. Lady cannot have a reply. She did not ask a proper question; she only made an accusation. Questions should be asked to obtain information, and not to make accusations.

Oral Answers to Questions — ROYAL AIR FORCE

Stations (Redundancy)

Mr. Driberg: asked the Under-Secretary of State for Air whether he is aware that a number of airmen are inadequately occupied at an R.A.F. station, of whose identity he has been informed; that they are engaged neither directly nor indirectly in providing transport for repatriation or in the policing of liberated territory; and whether he will take every possible step to detect and to check redundancy at this and other stations, with a view to expediting R.A.F. demobilisation.

The Under-Secretary of State for Air (Mr. Strachey): This station provides signals training for members of Coastal Command. This Command has fewer aircrews to be trained now, and some of the men under training for aircrew have had to be remustered. The station will be closed down altogether by 31st December.

Vizagapatam Station (Conditions)

Mr. Driberg: asked the Under-secretary of State for Air whether he has considered the letter addressed to him on 22nd September by the hon. Member for Maldon (Mr. Driberg) concerning conditions at the R.A.F. Station, Vizagapatam; and whether he can now make a statement on the points raised therein, particularly in regard to health and to the length of time that airmen are required to serve at this station?

Mr. Strachey: Yes, Sir. With the hon. Member's permission, I will circulate a detailed reply to the points he has raised in the Official Report.

Mr. Driberg: Can my hon. Friend say now whether he is going to reduce the time that men will have to serve at this very unhealthy station?

Mr. Strachey: Yes, Sir. As a matter of fact the station is to be closed down by the end of the year, except for a very small staging post.
Following is the statement:
Vizagapatam was used as an assembly point for a recent operation and at the time of the hon. Member's visit was still suffering from the added discomfort which the needs of that operation entailed. Since then numbers at the station have returned to normal and it has been possible to move airmen into a new section of the camp where the domestic accommodation is fitted with electric lighting and fans, although the severe shortage of fans has made it impossible to provide them also in sleeping quarters. The station will be completely vacated by the end of this year, except for a small staging post unit for which adequate arrangements are being made.
The climate of Vizagapatam is trying and humidity is high; hence there is a high incidence of skin disease. In view of these conditions, a limited tour of duty is being instituted at this station. Of the present strength only about 100 men have been there more than six months, and only eight men have been there over 18 months.
All possible measures have been taken to accelerate the delivery of first-class mail to units in India; some delays in distribution are inevitable in monsoon weather.
The catering at Vizagapatam is considered to be as good as that at R.A.F. units in India generally. Every effort continues to be made to improve the standard and variety of diet in this theatre as a whole.

Closed Road (Reopening)

Sir G. Fox: asked the Under-secretary of State for Air when it is proposed to reopen to the public the Bicester to Buckingham road, which at


present is closed where it joins R.A.F., Bicester; and what is the reason for the delay in opening this road?

Mr. Strachey: This road is now being reopened.

A.T.C.

Mr. Touche: asked the Under-secretary of State for Air whether he has any statement to make on the future of the A.T.C.

Mr. Strachey: A statement on the future of the A.T.C. will be made by my Noble Friend in another place and at an early date.

Service Personnel (Transport)

Mr. Quintin Hogg: asked the Under-secretary of State for Air how many squadrons of the R.A.F. representing what number of personnel are at present engaged solely or mainly on transport of Services personnel to and from overseas theatres.

Mr. Strachey: The present figure, for Royal Air Force Squadrons, is already over 50. It is impossible to give an exact figure of the number of men which this represents. But I repeat that it is calculated that at the height of the trooping programme some 40 per cent. of the whole of the Royal Air Force will be engaged directly or indirectly on the transportation task.

Requisitioned Parks (Release)

Mr. Robens: asked the Under-secretary of State for Air when he proposes to derequisition public parks and open spaces so that the public can enjoy once again without let or hindrance these amenities; and, in particular, when does he contemplate that Heaton Park, Manchester, is to be returned to the public.

Mr. Strachey: I fully appreciate the importance of releasing public parks—and in particular Heaton Park, Manchester—for the enjoyment of the public. The trouble is that the huts at Heaton Park are urgently needed in order to enable us to release requisitioned house property elsewhere in Lancashire. However, I hope that we shall soon be able to work out a plan with Manchester Corporation for the release of part of the park in the immediate future and the whole of it as soon as suitable alternative accommodation can be found.

Mr. Robens: asked the Under-secretary of State for Air whether he is aware that Ardwick Green Park, Manchester, is still held by his Department, although not used for over 12 months; that this is the only available open space in a badly congested area for the use of children; and whether he will expedite the work of his Department dealing with compensation for reinstatement.

Mr. Strachey: This park was derequisitioned over a year ago. No claim for compensation has yet been received by my Department.

Airfield Construction Squadron

Mr. David Jones: asked the Under-secretary of State for Air whether he is aware that Squadron 5053 R.A.F., which was initially formed as a shock unit to repair aerodromes damaged by enemy action, which is composed of nearly 70 per cent. men skilled in constructional work, is now engaged in repairing damaged buildings in Benghazi, Libya and other places; and whether he will utilise the services of these men and their skill in constructional work in effecting repairs to property in this country.

Mr. Strachey: This airfield construction squadron is now working solely on service accommodation that is needed for the Transport Command programme of bringing men and women of all the Services home from the East. I should add that at Marble Arch, construction work was done for reinforcement aircraft on their way to the war in the East, but with the end of the war will no longer be required for that purpose. But we could not foresee this when the work began there.

Permanent Commissions (Applications)

Wing-Commander Roland Robinson: asked the Under-Secretary of State for Air how many serving officers have made applications for permanent commissions in the R.A.F.; how many of such applications have been accepted; and what terms of employment are offered to those not yet accepted.

Mr. Strachey: I would refer the hon. and gallant Member to my reply of 24th October to the hon. and gallant Member for Macclesfield (Air-Commodore Harvey). Officers who are being considered for permanent commissions have the opportunity of prolonging their service on their exist


ing terms of employment or of being considered for extended service under a scheme, particulars of which I am sending to the hon. Member.

Wing-Commander Robinson: Is the Minister aware that many officers and men who otherwise would stay in the Forces are leaving on account of uncertainty about their future employment? Is it not about time that the Air Ministry made up its mind as to the future of the R.A.F., so that the men in it can know what lies before them?

Mr. Strachey: My Department is wellaware of that, but it depends upon the future of the three Services, and that is a question of considerable moment which cannot be settled in a minute.

Post-War Conditions

Wing-Commander Roland Robinson: asked the Under-Secretary of State for Air what inducements are offered to officers and other ranks who seek permanent employment with the R.A.F.

Mr. Janner: asked the Under-Secretary of State for Air whether he is aware that men desiring to remain in the R.A.F. as a peacetime career are concerned atthe possibility of a reduction in pay to the pre-war level and of a reversion to their pre-war ranks; and whether he will make a statement thereon.

Mr. Strachey: As my right hon. Friend the Secretary of State for War and I have already informed the House, an announcement will be made as soon as possible, and this should deal with the pay, pensions, and terms of service for the Regular Armed Forces. It is hoped to achieve a broad equality of treatment based as far as possible on common principles between the three Services, while at the same time providing for the differences required to meet their respective functions.

Sir G. Fox: Will the Minister see that ex-warrant officers who have been promoted officers are not penalised in their pensions, as they are at present?

Mr. Strachey: I cannot anticipate the terms of the statement that will be made.

Sir G. Fox: Will the hon. Gentleman look into that?

Mr. Strachey: Certainly.

Oral Answers to Questions — WORLD YOUTH CONFERENCE DELEGATES (TRAVEL FACILITIES)

Mr. Yates: (by Private Notice) asked the Secretary of State for the Home Department if he is aware that in view of the delay caused by inadvertence in issuing visas to the youth delegates of Austria, Rumania and Bulgaria for the purpose of attending the World Youth Conference, no transport facilities have yet been provided for these delegates to reach the Conference which opens today, and if he will take immediate steps to provide these facilities.

The Secretary of State for the Home Department (Mr. Ede): I regret the delay, for which my Department was not in any way responsible. It is not within my power to provide transport for any person in a foreign country to travel to the United Kingdom.

Mr. Yates: Is my right hon. Friend aware of the fact that news has been received in writing from Austria this week to the effect that the responsible authority, the R.A.F. Transport Command, has so far declined to grant the necessary facilities? Will my right hon. Friend be good enough to use his influence to see that the necessary facilities are given?

Mr. Ede: I have no information bearing out that just given to the House by the hon. Member. I am exceedingly anxious that these people should come to this country. Visas were refused to them by the previous Government, and I reversed that decision and gave visas. It is a matter of regret to me that a slip occurred, which I am trying to trace so that I can deal with the person responsible, but I cannot undertake to provide transport.

Mr. Vernon Bartlett: Can the right hon. Gentleman say whether these delegates will be allowed to remain on in this country in order to see something of the British way of life, or is it true that they are told that they are to go home as soon as the Conference is over?

Mr. Ede: I would like notice of that question.

BUSINESS OF THE HOUSE

Mr. Churchill: May I ask the Leader of the House if he will state the Government's intentions with regard to the Business for to-day?

The Lord President of the Council (Mr. Herbert Morrison): Yes, Sir. We desire today to obtain the Reportstage of the Budget Resolutions, which are covered by the first four Orders on the Paper, and then there are three Purchase Tax Orders, which we also announced for consideration today. In addition, we hope that it will be agreeable to the House to pass the Second Reading of the Expiring Laws Continuance Bill and the Committee stage of the necessary Money Resolution. The House will be aware that the Committee stage is the effective stage of this Bill. As announced yesterday, we also desire to obtain the Motion relating to the Select Committee to which the Bank of England has been referred, as well as the Committee stage of the Money Resolution.

Mr. Churchill: It seems rather a lot, but I gather that the Leader of the House does not wish to press the House to sit too late.

Mr. Morrison: No, Sir, I hope that that will not be necessary. It perhaps sounded more when I said these things than, in fact, it is. I hope that the House will be able to carry through the programme I have indicated, but I agree with the right hon. Gentleman that we would not wish to ask the House to sit too late.

CEYLON (CONSTITUTION)

The Secretary of State for the Colonies (Mr. George Hall): Mr. Speaker, with your permission and the permission of the House, I ask to be allowed to make a short statement on the proposed constitutional changes in Ceylon. I am presenting to the House this afternoon a White Paper embodying a statement of policy by His Majesty's Government on Constitutional Reform in Ceylon, which indicates the conclusions which His Majesty's Government have reached on the recommendations made in the Report of the Commission which visited Ceylon under the chairmanship of Lord Soulbury. The main decisions reached by His Majesty's Government are stated in paragraph 10 of the White Paper, copies of which Members will be able to obtain at the Vote Office at five o'clock. This paragraph reads as follows:
His Majesty's Government are in sympathy with the desire of the people of Ceylon

to advance towards Dominion status and they are anxious to cooperate with them to that end. With this in mind His Majesty's Government have reached the conclusion that a Constitution on the general lines proposed by the Soulbury Commission (which also conforms in broad outline, save as regards the Second Chamber, with the constitutional scheme put forward by the Ceylon Ministers themselves) will provide a workable basis for constitutional progress in Ceylon.
Experience of the working of Parliamentary institutions in the British Commonwealth has shown that advance to Dominion status has been effected by modification of existing Constitutions and by the establishment of conventions which have grown up in actual practice.
Legislation such as the Statute of Westminster has been the recognition of constitutional advances already achieved rather than the instrument by which they were secured. It is, therefore, the hope of His Majesty's Government that the new Constitution will be accepted by the people of Ceylon with a determination so to work it that in a comparatively short space of time such Dominion status will be evolved. The actual length of time occupied by this evolutionary process must depend upon the experience gained under the new Constitution by the people of Ceylon.
As I have indicated, His Majesty's Government have decided to offer the people of Ceylon a Constitution on the general lines proposed by the Soulbury Commission, with some modifications which are indicated in the White Paper, and are anxious that Ceylon should continue to advance towards Dominion status. His Majesty's Government propose, therefore, to press forward to the achievement of that objective guided by the practical experience which the Constitution now offered will afford.

Colonel Oliver Stanley: The right hon. Gentleman has just made a very important statement. I have only two comments to make. The first is that I assume that this House will be given an opportunity of discussing this very large constitutional change before it is put into effect. I think, too, that if the right hon. Gentleman will inquire from the Colonial Office, he will find that a definite pledge upon that subject was given by a predecessor of mine to this House, and I am sure that not only would he desire to honour that pledge, but he would agree that, when we have a great constitutional development affecting millions of our fellow subjects in the Colonies, this House should have an opportunity of discussing it. My second point is that I congratulate the right hon. Gentleman


most sincerely on being converted to the merits of the bicameral form of Government.

Mr. Hall: With regard to the first part of the right hon. Gentleman's Question, if after he has read the contents of the White Paper he and others with him still think that a Debate is required, then, if they will get into touch with my right hon. Friend the Leader of the House, possibly the matter can be discussed.

Colonel Stanley: It is not in this case a matter of reading the details of the White Paper. It is not whether we agree or disagree with the right hon. Gentleman's proposals. Frankly, I, personally, agree with them, but it is really a matter of such importance that it ought to be discussed by this House.

Mr. Hall: That is a matter, of course, which must be discussed through the usual channels or with my right hon. Friend the Leader of the House.

Colonel Stanley: Perhaps the Leader of the House will reply.

Mr. Driberg: Can my right hon. Friend say anything about the prospect of any early General Election in Ceylon? Would it not be appropriate that the new Constitution should come into force when there was a new State Council, instead of the present very aged one?

Mr. Hall: A question dealing with that matter was replied to last week.

Mr. Driberg: The answer was not satisfactory.

Mr. Herbert Morrison: I am willing to consider fairly any points that are raised on this matter through the usual channels, but I am really not going to commit myself to the doctrine that because the Government announce a policy, even if there is general agreement in the House about it, there is to be a Debate. We have a lot of things to do and there is plenty of disagreement about much that has to be done, but I am willing to consider fairly any requests that are made.

Sir Ronald Ross: Is it the policy of the Government that this House should become a rubber stamp as regards major changes of constitution within the British Commonwealth?

WAR DAMAGE (VALUATION APPEALS) BILL [Lords]

Read the First time; to be read a Second time upon Monday next, and to be printed [Bill 30].

STANDING COMMITTEES

Mr. SPEAKER being of opinion that the Water (Scotland) Bill is a Bill relating exclusively to Scotland, the Bill will be considered by the Standing Committee on Scottish Bills.

MESSAGE FROM THE LORDS

That they have agreed to—

Consolidated Fund (No. 1) Bill.

Indian Divorce Bill, without Amendment.

That they have passed a Bill, intituled, "An Act to consolidate with amendments the provisions of Part IV of the Public Health (Scotland) Act, 1897, as amended by the Public Health Act, 1904, relating to epidemic, endemic or infectious diseases."

Public Health (Scotland) Bill [Lords.]

LIBRARY (HOUSE OF COMMONS)

That they give leave to Charles Travis Clay, Esquire, C.B., Librarian to the House of Lords, to attend in order to his being examined as a Witness before the Select Committee on Library (House of Commons).

PUBLIC HEALTH (SCOTLAND) BILL [Lords]

Read the First time; to be read a Second time upon Monday next, and to be printed [Bill 29].

COLNE VALLEY WATER BILL [Lords]

Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).

Bill, as amended, and Report to lie upon the Table; Report to be printed.

MID SOUTHERN UTILITY BILL [Lords]

Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).

Bill, as amended, and Report to lie upon the Table; Report to be printed.

BUSINESS OF THE HOUSE

Proceedings on Government Business exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House).—[Mr. H. Morrison.]

Orders of the Day — WAYS AND MEANS

REPORT [23rd October]

Resolutions reported:

SPIRITS (EXCISE)

1. "That no allowance shall be paid—
(a) under Section three of the Customs and Inland Revenue Act, 1885, in respect of plain British spirits exported from or used in, or spirits in the nature of spirits of wine exported from or used or deposited in, a customs or excise warehouse; or
(b) under Section six of the Finance Act, 1895, in respect of spirits used for methylation which are removed from a place of methylation and exported; or
(c) under Section one of the Revenue Act, 1906, in respect of spirits (including methylic alcohol) used by an authorised methylator or received by any person for use in any art or manufacture under Section eight of the Finance Act, 1902; or
(d) under Section three of the Revenue Act, 1906, in respect of spirits of wine exported direct from the premises of a person licensed to rectify or compound spirits;
and Subsection (5) of Section forty-six of the Spirits Act, 1880 (which provides for an allowance for wastage of spirits in a distiller's spirit store) shall cease to have effect, and provision shall be made by regulations of the Commissioners of Customs and Excise in lieu of the provisions of Subsection(1) of Section sixty-six of the Spirits Act, 1880 (which relates to deficiencies occurring in warehouse)."

MECHANICALLY PROPELLED VEHICLES (CHARGE OF EXCISE DUTY BY REFERENCE TO CYLINDER CAPACITY INSTEAD OF HORSE-POWER).

2. "That—
(a) the duty of excise in respect of a mechanically propelled vehicle, being a vehicle which derives its motive power wholly from an internal combustion engine worked by a cylinder or cylinders and which is chargeable with such duty under paragraph 6 of the Second Schedule to the Finance Act, 1920, by reference to its horse-power, shall, in the case of such a vehicle registered under the Roads Act, 1920, for the first time on or after such date as may be fixed by order of the Treasury, be charged by reference to the cylinder capacity of the vehicle, calculated in accordance with regulations made by the Minister of War Transport, instead of by reference to its horse-power;

(b) for the purposes of this Resolution a unit of cylinder capacity shall be one hundred cubic centimetres;
(c) the duty to be charged in respect of such a vehicle so registered shall be charged at a rate for each unit or part of a unit of cylinder capacity equal to four-fifths of the rate fixed by the said paragraph 6 for each unit or part of a unit of horse-power, so however that, in a case in which duty so charged would be less than duty charged at the rate fixed by the said paragraph 6 for a vehicle not exceeding six horse-power, the rate of the duty in respect of the vehicle shall be the last-mentioned rate;
(d) it is expedient to extend references to horse-power in the Finance Act, 1920, and other enactments so as to include references to cylinder capacity."

PURCHASE TAX

3. "That, as from the twenty-fourth day of October, nineteen hundred and forty-five, purchase tax shall cease to be chargeable in respect of goods of the classes specified in the Table set out at the end of this Resolution, subject to any subsequent order under Section twenty of the Finance (No. 2) Act, 1940.

Table

(1) Domestic cooking, space heating and water heating appliances of the following descriptions, namely,—
stoves, grates, ranges and fireplaces; boiling rings, grillers and hot-plates; radiators and convectors;
instantaneous water heaters, immersion water heaters and storage water heaters; wash boilers and wash coppers.
(2) Parts of such stoves, grates, ranges and fireplaces as aforesaid.
(3) Domestic refrigerators."

HIGHER RATES OF INCOME TAX FOR 1945–46

4. "That income tax for the year 1945–46 shall be charged at rates exceeding the standard rate in the case of individuals whose total incomes exceed two thousand pounds, and those rates shall be rates in the pound which respectively exceed the standard rate for that year by the amounts specified in the second column of the Table in Subsection (1) of Section seven of the Finance (No. 2) Act, 1940."

TAX FREE PAYMENTS

5. "That Section twenty-five of the Finance Act, 1941 (which contains provisions as to certain tax-free annuities, etc., applicable only when the standard rate is ten shillings in the pound) shall be applied, with modifications, to all years for which the standard rate of income tax exceeds five shillings and sixpence in the pound."

APPOINTED DAY FOR CERTAIN PURPOSES

6. "That the appointed day for the purposes of the Income Tax Act, 1945, and Part IV of the Finance Act, 1944, shall be the sixth day of April, nineteen hundred and forty-six."

Income Tax on Excess Profits Tax Refunds

7. "That income tax for the year 1946–47 shall be charged on the full amount of all sums repaid, at whatever date, under Section twenty-eight of the Finance Act, 1941 (which provides for the repayment after the war of certain excess profits tax), and those sums shall be treated as income for all the purposes of the Income Tax Acts."

CHARGES TN CONNECTION WITH REDUNDANCY SCHEMES

8. "That, subject to the provisions of any Act of the present Session making further provision in connection with finance—
(a) sums received under schemes certified by the Board of Trade under Section twenty-five of the Finance Act, 1935, or under schemes for the elimination or reduction of redundant works, machinery or plant, or for other similar purposes, to which effect is given by or under any Act (whether passed before or after the passing of this Resolution) shall be treated for the purposes of income tax as if they were trading receipts;
(b) where any sums so received are not so treated, contributions paid under the scheme shall, to a corresponding extent, not be allowed to be deducted in computing profits,
(c) where a contribution paid under any such scheme as aforesaid is allowed to be deducted in computing profits and the whole or part thereof is subsequently repaid, the deduction of the contribution or of so much thereof as is repaid shall be deemed to be an unauthorised deduction; and
(d) where a certificate granted with respect to a scheme under the said Section is cancelled or a scheme to which effect is given as aforesaid comes to an end, any funds held for the purposes of the scheme shall be chargeable to Income Tax."

RELIEF FROM DOUBLE TAXATION

9. "That—
(a) where any agreement has been made between His Majesty's Government in the United Kingdom and the Government of any other territory which makes provision for granting relief in cases where the same income is chargeable to United Kingdom Income Tax and to the Income Tax pay able under the laws of that territory, charges to tax may be made to give effect to any provision included in the agreement or otherwise in connection with the agreement, and where the agreement is between His Majesty's Government in the United Kingdom and the Government of a territory which is a Dominion as defined by Section twenty-seven of the Finance Act, 1920, that Section shall cease to have effect in relation to Income Tax of that Dominion except so far as the agreement otherwise provides;
(b) in all cases to which the said Section twenty-seven applies, the tax deductible from dividends under Rule 20 of the General Rules shall be tax at the full standard rate, and any relief given under the said section twenty-seven in respect of

any profits or gains represented by the dividends shall be taken into account in determining what repayments of tax are to be made to, or charges to tax made on, the persons entitled to the dividends."

EXCEPTIONAL DEPRECIATION ALLOWANCES

10. "That it is expedient to amend the provisions of the Income Tax Acts relating to exceptional depreciation allowances, as respects all years of assessment affected by those provisions."

EXTENSION OF TIME FOR MAKING ASSESSMENTS IN CERTAIN CASES

11. "That assessments to Income Tax may be made at any time, if required in consequence of—
(a) any alteration of the amount which falls to be taken into account in respect of Excess Profits Tax or the national defence contribution in computing the liability of any person to Income Tax; or
(b) any determination as to whether any allowance is receivable by any person in respect of exceptional depreciation of buildings, machinery or plant, or as to the amount of any such allowance."

ESTATE DUTY (AGREEMENTS FOR RELIEF FROM DOUBLE DUTY)

12. "That where any agreement between His Majesty's Government in the United Kingdom and the Government of any other territory makes provision for granting relief from double taxation in relation to estate duty payable under the laws of the United Kingdom and any duty of a similar character payable under the laws of that territory—
(a) effect shall be given to any provision included in the agreement relating to the place where any property is to be treated as being situated for estate duty purposes; and
(b) the relief to be given under the agreement shall be in lieu of any relief under Subsection (4) of Section seven of the Finance Act, 1894, or under Section twenty of that Act, as extended by or under any other enactment."

EXCESS PROFITS TAX

13. "That the extent and incidence of Excess Profits Tax (for past and future chargeable accounting periods) shall be varied so as to give effect to amendments of the law relating—
(a) to the computation of profits;
(b) to the time within which assessments to Excess Profits Tax may be made;
(c) to relief from double taxation;
(d) to relief in respect of deficiencies of profits; and
(e) to repayments of tax under Section twenty-eight of the Finance Act, 1941."

NATIONAL DEFENCE CONTRIBUTION

14. "That the extent and incidence of the National Defence Contribution (for past and future chargeable accounting periods) shall be


varied so as to give effect to amendments of the law relating—
(a) to the computation of profits;
(b) to the time within which assessments to the National Defence Contribution may be made; and
(c) to relief from double taxation."

Orders of the Day — SPIRITS (EXCISE)

First Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Colonel Oliver Stanley: Are we not to have any explanation of this complicated Resolution?

3.30 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): I will gladly give the House any explanation within our power. It is, as the right hon. and gallant Gentleman has said, a very complicated Resolution. The effect of it will be to save the Revenue about £1,000,000 in a full year. It is a Resolution which was introduced last April by the ex-Chancellor of the Exchequer in his Budget. Some considerable time ago, under the old law, a prohibition was put upon brewing and distilling at one and the same time. The result was that those engaged in brewing and distilling felt that they had a grievance because it involved them in extra expense. It was in those days felt to be essential that brewing and distilling should not take place at one and the same time, for the protection of the revenue. Times have changed, and it is now felt that it is possible to protect the revenue without having to insist on brewing and distilling taking place on different occasions. Up to now an allowance of 3d. has been made to the distillers to meet their extra charges in this direction, but as the prohibition has come to an end it is thought that the allowance also should be withdrawn. A White Paper setting forth the whole story was issued last April, and hon. Members who desire to have further information on the matter and to know exactly why the Chancellor has decided to end the allowance will find that explained in that White Paper, which is Command Paper 6622.

Mr. Godfrey Nicholson: I should like to say a few words about the Resolution, but before doing so I feel bound to declare my own private interest in this matter, because my family business happens to be one of the two or

three independent businesses engaged in the manufacture of industrial spirit which are referred to in the Command Paper mentioned. We are independent of the combine, so I think it is important that our views should be heard. I think the withdrawal of these drawbacks is absolutely justified and ought to have been done a long time ago. The withdrawal now is consequent upon the Government's decision to repeal the Spirits Act, 1880, and to control the manufacture of spirits under regulations that will be promulgated by Order. It is an interesting commentary on the change in the business proceedings of this House that in 1880, 65 years ago, the House was prepared to spend a very long time upon the discussion of regulations that were purely technical. It is an excellent example of the great improvement brought about, of legislation, in this case by Order, as against ordinary Acts of Parliament. I wish to say something more about this Command Paper. Without going into technicalities—I must say that we did not give evidence before it, and I am not personally involved in this at all—I must say that it is disturbing to note that it seems to have been a most undignified inquiry. A number of witnesses behaved, to my mind, in a very undignified manner, and the Commissioners themselves retorted by what was, in effect, a very unfair bias in their report. I very much regret that, but I feel bound, speaking as a neutral person interested in this trade, to make these rather harsh comments on the conduct of witnesses and of the Committee itself.
Having said that, I have said all I mean to say except that I hope the House will agree with this Resolution, because it is entirely justified and the drawbacks should have been withdrawn long ago. I would only add that I think any Government will have to make up its mind whether the manufacture of industrial alcohol in this country is of national advantage or not, because it is quite possible that it will be found that it is more economical to manufacture industrial alcohol in, say, the West Indies or other sugar producing areas, rather than import the raw molasses into this country and make it into alcohol here. I just sound this note of warning, because that is a difficulty with which this Government and every future Government will be faced. I support the Resolution.

Lieut.-Commander Gurney Braithwaite: I am sure that the House is going to give the Government this Resolution without undue delay or debate, which would not have been the case if we had still had the pleasure of the company of the Noble Lady who used to represent the Sutton division. I imagine that this Resolution is part of the Government machinery for the protection of dollar exchange. Whisky, whatever its merits or demerits, is a very popular export to the United States of America and I am sure the Chancellor has that in mind in framing this Resolution. The stop which was put to double distillation during the war was a wartime measure, and we welcome this change as a harbinger of peace, as one of the ways in which we are ready to march forward; and as a Member representing an agricultural area which supplies some of the raw material for the distillation of whisky I wanted to say, on behalf of my constituents, that I welcome this Resolution and hope it will be passed.
Question, "That the House doth agree with the Committee in the said Resolution," put, and agreed to.

MECHANICALLY-PROPELLED VEHICLES DUTIES

Second Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

The Chancellor of the Exchequer (Mr. Dalton): We shall have an opportunity of discussing this matter on which, as I know, opinion is not unanimous, and in which great interest is taken, when we reach the Finance Bill, and it occurs to me that it would be inconvenient, perhaps, to have a double discussion upon it. My own attitude towards the matter, as I sought to explain when making my Budget speech, is that granted the adoption of the cubic capacity tax, which is, I think, preferred by all to the previous cylinder horse-power tax, we have put down a Resolution in terms of narrow steps, following the advice we have received—which was not unanimous but it was the advice of the majority—from the motor car industry. I went on to say in my Budget statement that the mind of the Government was not closed on the matter, that we apprehended that there were powerful arguments both for the narrow steps and for the wide steps, and

that so far as I was concerned I was prepared to listen with attention to the run of the Debate on this subject and, in the light of the balance of arguments adduced, to make a submission to the Committee at the end of the discussion on whether to retain the proposal in the form in which we have made it or to modify it in the direction of wider steps. I shall not be able to go further than that today, nor will my hon. Friend, and if there is debate on the subject today we shall have to ask the House to adhere to the form in which the Resolution is put down now, namely, in favour of the narrow steps and it will be open in Committee for an Amendment to be made in favour of wider steps if it should seem to the Government that that is desirable after the subject has been fully debated on the Finance Bill. That being so, and since we have a number of ether Resolutions, I wondered whether it would not be better to leave the discussion of this matter until we reach the Committee stage of the Finance Bill, because otherwise we should be discussing the same thing twice over.

Colonel Stanley: I think it would be very useful to have a preliminary discussion now. We certainly should not divide against the Resolution because it was drawn in this particular form, but we should like an assurance that it is drawn in such a manner that its amendment would be possible on the Finance Bill. I am a little uncertain whether that is so, and whether we should be able to put down an Amendment.

Mr. Dalton: An Amendment would be in Order, I am advised, which would knock out a number of steps, that is to say produce wider steps by knocking out some of the steps in the existing scale. I repeat that my mind is open, or at any rate partly open, on the subject. I am not committing myself to putting down such an Amendment, but as a matter of Order that would be the way to proceed.

Colonel Stanley: In view of the fact that the right hon. Gentleman's mind is open I am sure he would not object to some of my hon. Friends trying to fill it for a short time.

Captain Gammans: I am afraid that I cannot agree to the Chancellor's suggestion to defer any consideration of this matter, partly because I do


not agree with the whole business, and also because I want to ask him a specific question. I notice that in his Budget speech he said:
I have received a good deal of conflicting advice."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1888.]
I have no doubt a Chancellor of the Exchequer always gets a lot of conflicting advice, but what I want to ask him is from what quarters he has received it, because I make no secret of the fact that personally I deplore the decision in this matter from beginning to end. I am convinced that if we adhere to the horsepower tax in any shape or form, even although disguised as a cubic capacity tax, we shall be condemning the British motor car industry to a permanent status of inferiority in comparison with the American, and shall prevent British motor cars from playing that part in our export trade to which the Chancellor, I know, looks forward.
I do not know whether many hon. Members had the same doleful experience that I have had of seeing British motor cars trying to compete with American motor cars in various parts of the world, even in the comparatively sheltered markets of the British Empire. Up to now the whole position has been perfectly ludicrous. At this time last year, when I was in Trinidad, I made inquiries about the postwar possibilities for British motor cars. One of the dealers to whom I spoke said, "Come down to my garage and let me show you something." He showed me a 12 horsepower British car and a 30 horsepower American car, both at the same price, and remarked, "Do you ever imagine that the British car is going to compete in those conditions?"
What we are continuing to do is to subordinate sound engineering to a purely arbitrary factor like taxation, and to place the British motor car industry under a handicap from which it has hitherto never recovered. This has led to a multiplicity of models. One never sees American motor car manufacturers turning out eight or ten or a dozen models, as our manufacturers do. It means that we are throwing away in advance most of the advantages of mass production. We are designing a car which is not based upon sound engineering principles but designed merely to dodge the Chancellor of the Exchequer. The other handicap from

which our industry suffers is that we have to produce a special model for export. I hope the right hon. Gentleman realises that if we produce a special model for export only, and cannot rely upon the great home market, we can never compete with the United States. He is going to find that out when it comes to the question of Purchase Tax—and the effect of which will be that he will not get the volume of production which will enable us to compete economically in the markets of the world. Our industry has always suffered from those two handicaps, and under the existing system of taxation apparently it is to go on suffering indefinitely.
3.45 p.m.
But the question I wish to ask, and to which I hope either the Chancellor or his hon. Friend will reply, is: From whom was the advice received? He has certainly not received it from the users of cars, as represented by the A.A., R.A.C., and the Scottish R.A.C., who are unanimously opposed to the continuation of the horse-power tax and are in favour of the Chancellor adopting a system of a fixed licensing fee, plus a tax on petrol. He has certainly not received that advice from the Motor Agents' Association, who have to sell the cars, and who again are entirely opposed to this idea. He has certainly not received it from at least two of the largest manufacturers, and he has certainly not received it, I imagine, from the trade unions.
I do not know whether the Chancellor of the Exchequer was in the House less than six months ago, when his right hon. Friend the Foreign Secretary made an illuminating speech on this subject. It was on 4th June, 1945, and this is what he said:
I carefully estimated that, if this thing were revised and put on a proper basis, as I have submitted to the Chancellor over and over again, nearly another 500,000 people would be permanently employed in the motor car industry of this country."—[OFFICIAL REPORT, 4th June, 1945; Vol. 411, c. 579.]
We have never learned to associate the Foreign Secretary with wild or irresponsible statements, and I assume that, when he made that statement, he was not merely voicing his own ideas but putting forward the view of the great trade union movement of the country and especially of the Transport and General Workers' Union. Is the right hon. Gentleman going to entirely ignore a recommendation of


this sort, which shows that another 500,000 people could be employed in the motor car industry if this tax were adopted in that form?
From whom, then, has the Chancellor taken advice? Is he referring to the Passenger Carrying Vehicles Association, or bodies of that sort, because I want to tell him—and he is probably not aware of it—that in the last few days or weeks, these bodies have at last got together. I would be one of the first to admit that the motor car industry has suffered in the past from the fact that these people did not get together and present a united front. I have reason to believe—I will not put it any higher than that—that if the Chancellor is still prepared to keep an open mind on the whole basis of taxation, he may, in the course of the next few weeks, receive representations from all branches of the industry which will show him that they are in favour of the abolition of the horse-power tax, in any shape or form, and the substitution of a licensing fee, plus such additional tax on petrol as is necessary to make up the same revenue.
I want to ask the Chancellor two questions. First, would he tell the House what advice he has listened to, and if he is to ignore the voice of the trade union movement in this matter; and, secondly, whether his mind is still open to representations on the alteration of the whole basis of taxation?

Mr. Pargiter: One part of the speech of the hon. and gallant Member for Hornsey (Capt. Gammans) cannot be allowed to go unchallenged. The hon. and gallant Member said, I believe, that we were not producing, in our motor cars, a sound engineering job. I feel that that ought not to go out of the House unchallenged, because I am satisfied, and I know a little about the industry, that we do produce, from the point of view of design, a really sound engineering job and a really well-constructed job.

Captain Gammans: Possibly, I did not make it clear. I certainty did not want to give the impression that the British motor car industry was incapable of producing a sound engineering job. I said that they were in the unfortunate position of having to subordinate sound engineering principles to taxation.

Mr. Pargiter: When the hon. and gallant Member spoke of subordinating sound engineering principles, the implication is that we have not produced a sound engineering job. I say that the British car is a sound engineering job, in spite of the limitations of the horsepower tax, and I am satisfied that we do produce a good job. What is rather interesting to me is that the hon. and gallant Member was unable to convince his side of the House, when they had overwhelming power, of the urgent necessity of this change. Presumably, the manufacturers would have supported him—and that side of the House. Now, he expects this Government and the Chancellor to make that alteration at a time when it is obvious, from the taxation point of view, that it is most undesirable to do so. There is, at the present time, a restriction on the use of petrol. What sort of tax would there have to be on petrol to produce the amount of revenue which the Chancellor would lose? Surely, that is a satisfactory answer to the hon. and gallant Gentleman at this stage. It seems to me that the Chancellor has gone as far as we could reasonably expect him to do at this particular juncture, and, on another occasion, when an opportunity presents itself, when the level of taxation that may be raised from motor cars may be of such a volume as will justify the alteration being made, I hope we shall find that the Chancellor's mind will be just as open as the hon. and gallant Member expects it to be at this time.

Sir Peter Bennett: I should have been quite willing to have followed the Chancellor's advice and left this question for further discussion when the Finance Bill comes before us, but the hon. and gallant Member for Hornsey (Captain Gammans) has raised one or two points which I think must be dealt with now, for fear of creating some misapprehensions. The hon. and gallant Member asks where the Chancellor got his information, and he stated that private car users are in favour of a tax on petrol. That is correct; they have been for the last 20 years, to my knowledge. The hon. and gallant Member also mentioned that manufacturing interests, or rather two manufacturers, were also in support of it. He did not tell the House that they are in a minority of two, and that the rest of the motor car manu


facturers support the method which has been suggested by the Chancellor.
The motor manufacturers put their views to the late Chancellor and I have no doubt that they have put them to the present Chancellor, and suggested that the R.A.C. rating, which takes notice only of the bore and ignores the stroke, should be dropped in favour of a rating based on cubic capacity. But they did agree that, if the Chancellor was willing to accept any other method of taxation, they would not press their objections, but that that was their view as to the best method. The Chancellor has accepted this method of taxation, and the motor manufacturers, therefore, naturally feel satisfied, with the exception of two dissentients, that it is the best method under the circumstances. As I stated during the Debate on the Budget, this will make no real difference. So long as we are going to tax motor cars to the extent that we do, so long are we going to have small motor cars. There is no mystery about it. Even under the taxation before the war, which was lower than it is today, 90 per cent. of the cars produced were 12 horse power and under, and something like 80 per cent. between eight and ten horse power. I am speaking without having the exact figures in front of me.

Captain Gammans: Would my hon. Friend agree that, if 90 per cent. of the cars produced were under 12 horse power, this type of British car is quite unsuitable for export, and, therefore, so long as the Chancellor is hoping to increase our export of motor cars, that system, whatever we may call it, is not suited to the policy he has outlined?

Sir P. Bennett: I was only trying to make the point that, under any system of taxation, where you are going to make motoring expensive, you are going to have the public asking for small cars. Other countries produce larger cars, but petrol is much cheaper, and registration fees are not as high. They do not regard transport as a means of raising revenue, but rather as a means of life. We have always regarded motor transport as being a rich man's hobby and, therefore, to be taxed. As I have said before, and shall continue to say, we shall never get our share of the world's motor car market until we tax the motor car as

a transport vehicle and not, like whisky or beer, as a means of raising revenue. If we could free motors from high taxation, we should be making motor cars cheaper and should get bigger cars. For that reason, if the Chancellor accepts, as the motor car industry will accept, this basis, they will then say to him, "Neither a tax on cubic capacity nor any other change will produce larger motor cars for export. The only way to produce larger cars is by reducing the amount of taxation, and that the Government is not prepared to do at the present time."
We say, therefore, that, if you are going to have this method of taxation, let us have it in the smallest steps possible. The hon. and gallant Member for Hornsey talked about eight and ten different models, but the hon. and gallant Member is thinking about body styles. The British manufacturer, and the foreign manufacturer, do not manufacture a large number of different engines, but they have had a habit in the past of making their engines 11·9, 13·9 and 15·9 horse power—always getting the highest possible level they can under the taxation. Under this restricted method, you would get the same thing over and over again. If a manufacturer is to have four steps, you will get four in that way, but, if he is told that he can have 10 steps, he will not make 10 different cars, but will reckon up the weight of the chassis, how much it will cost in taxation, and, if necessary, add another 100 cubic centimetres, and so he will produce a better car. The short steps will give him more scope in which to design.
I would have reserved these remarks for a later stage but for the remarks put forward by my hon. and gallant Friend, and I do not want the House to be under any misapprehension as to where British motor car manufacturers stand and why they stand there. We shall not get bigger cars under our present system of taxation. I can assure hon. Members that they will find some countries where you can sell small as well as large cars; there are other countries besides this where economic motoring is essential, as it is in this country, and those are the countries where we shall have to sell our cars.

Viscount Hinchingbrooke: The principal argument seems to me to be that mentioned by the hon. Member who has just sat down. It is


becoming clear that the taxation, in any form, of motor cars leads to reduction in output. I would like to obtain from the Chancellor some definite statement on why the Government want the same amount of money out of the taxation of motor cars as they have had in the past. I remember when the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) said he would consider a suggestion put to him, but mentioned the necessity of having the same amount of revenue out of cars. It is becoming clear that, if we keep motor car taxation high, people will not buy cars. They cannot afford them. If, according to the views of the hon. and gallant Member for Hornsey (Captain Gammans), we transfer the tax to petrol, there again the people who have large cars will have to pay high annual chargesin taxation in buying their petrol. Both aspects of the tax militate against the production of large cars and their export overseas. It is quite true, as the hon. and gallant Member for Hornsey said, that people abroad will not look at the small-powered English car as compared with the high-powered American car, and there is no hope of selling it. The distances are great, the roads are dusty and often bad, and a high-powered car is needed in order to overcome the difficulties and strain of long distances. Can we have from the Chancellor some definite statement about why it is necessary to keep on this taxation, and does he admit that, while he keeps it on, there is no prospect whatever of securing a very large output for British cars overseas?

4.0 p.m.

Mr. Cove: I do not pretend to be an authority on the engineering side, but I have listened with interest to the economic arguments put before the House this afternoon. I have always regarded the taxation of cars as not the cause of all the ills of the industry but as the effect. Taxation on cars in this country has been levied in a certain way because fundamentally the problem is to maintain our home market. That is, as I see it, one of the tremendous difficulties facing an industry like the motor car industry—the narrowness of the home market. The British home market relative to the home market in America is indeed a very small one. I remember very well being on a committee dealing with the subject of films, and masses of

technicalities were brought up in the course of the discussions, but we were up against the same problem as we are up against here, the relative largeness of the American market compared with the British market. Therefore the Chancellor has a very difficult job to synchronise the industry to the needs of the home market and the export market. We are so placed in Britain that the demands of the home market generally do not synchronise with the demands of the export market, and to keep the home trade we have been compelled to have relatively low-powered cars. That, as I see it, is one of the great problems facing the Chancellor.
I would like to ask the hon. and gallant Member for Hornsey (Captain Gammans) and other hon. Members this question:They want a certain form of taxation in this country—they want to take away the horse-power tax and put a tax on petrol, thereby giving a chance to the industry to capture the export market. Do my hon. Friends include also the lowering of the tariff on cars imported into this country in order to cheapen the running of cars? Will they open the floodgates? Will they expose us to the competition of American industry? Let us have cheap motoring, let us have big cars—I have no doubt that big cars are better than smaller ones and are more conducive to safety. We shall have safer roads if we have bigger cars, but are my hon. Friends prepared to go so far as not only to deal with the motor taxation itself but to remove the tariffs? They cannot argue for cheap cars and cheap motoring unless they are prepared to remove the tariffs. Fundamentally, we are up against the big unit of production that exists in America, we are up against the gigantic power of American production and no tinkering, as I see it, with the horse-power tax, and so on, will meet the gigantic problem that lies before this country.

Sir Wavell Wakefield: I intervene for one moment to impress upon the Chancellor of the Exchequer the point that he will impose this tax in small steps. I understand that the motor industry are quite unanimous in urging that small steps are desirable in the interests of the industry in imposing this tax. I understand also that they feel it would give greater elasticity for development of design, greater opportunity for using high


octane petrols, as and when they become available, and I also understand that it will not mean multiplicity of design as has been suggested. Small steps will really help the motor trade, not only for the home market but for export, and I hope that the Chancellor will give most earnest consideration to the representations he has received, or will receive, from the motor trade when he decides upon the way in which he will impose this tax.

Captain Crookshank: I merely wish to stress thatthis is a very important issue which is before the Chancellor today. After all, he has a very great opportunity, and if we make a mistake in this House now or during the course of the Finance Bill, we may do very great injury to a most important industry which we want to see developed still further. It comes back, I think, to something really fundamental and to a point which the right hon. Gentleman made in his Budget statement, of which I will give this sentence:
…it is claimed by some that the total weight of taxation on motor vehicles, however assessed, should be reduced. I cannot agree to this at present."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1888.]
So the Chancellor lays it down that whatever happens there can be no reduction in the amount of money coming into his coffers from motor cars. Is he absolutely right to take that line today? I have not had an opportunity of asking my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) but even if he said that six or 12 months ago, that was in a time of war when there was no question of making any motor cars at all, whether for home or for export, because we were not exporting in the latter war years. So it is really irrelevant, in my submission, to cast back to what any previous Chancellor may have said. This is the opening of a new era, possibly, in motor car manufacture in this country. The right hon. Gentleman the Chancellor of the Exchequer has told us several times that it is the opening of a new era in other directions—let him not overlook the opportunities that lie in front of him in this connection. I could see more strength in the argument that we must under no circumstances lose any revenue out of motor taxation if the old system still existed of linking up motor taxation with the expenditure on the

roads, which is really where it all started—the introduction of the Road Fund, and so on, which has long since been swept away, was, I think, part of the reason why the taxation of motor cars in those days was so high, but of course there has been a complete change in the world since then and the motor car is, as the hon. Member for Aberavon (Mr. Cove) pointed out, no longer a luxury—

Mr. Montague: Tell my constituents that.

Captain Crookshank: The hon. Gentleman may say that, but I will quote what the present Foreign Secretary said recently when this was being discussed. He said:
…why should we perpetuate the misery of any artisan or member of the lower-paid middle class having to ride in a car with his knees in his mouth."—[OFFICIAL REPORT, 4th June, 1945; Vol. 411, c. 579.]
I agree that is a most undesirable attitude to adopt, and evidently the Foreign Secretary envisaged the possibility of lots of people having motor cars and the more the better. I should certainly subscribe to that myself. It is a form of enjoyment which we hope may become as extensive here in due course as it is in the United States of America. I do not know how our roads will stand up to it, but that is another question.

Mr. Kirkwood (Dumbarton Burghs): How does that apply to those who are redundant and are only to get 24s. a week?

Captain Crookshank: I understand that will not last any longer in the new world which is just beginning. I merely put it to the right hon. Gentleman that this original link, partly a luxury link and partly a Road Fund link, has now entirely disappeared. He has this great opportunity of so moulding the taxation on motor cars as to bring about not only a great increase in this country but—again in the words of my hon. and gallant Friend the Member for Hornsey quoting from the Foreign Secretary—of seeing a great development of the industry here. In our search for vital exports it may very well be that by right design—and so far as that is due to taxation, by right taxation—the motor car industry has a very great future. I am not competent to go into the details of the steps. I have no personal knowledge of the general economics of the industry as have my hon. Friends,


but I would urge upon my right hon. Friend that if the hon. and gallant Member for Hornsey was right in the opinion he expressed—that the right hon. Gentleman might get completely united representations on this subject—that his mind should not be closed. I know it would not be, from what he said, but I would like to be quite certain that by passing the Resolution in this form we would not prohibit him from adopting any new suggestions.
May I put it the other way? Very often it is only after the production of the Resolutions that real discussions start with all concerned, and if he found subsequently that agreement could be reached upon some other basis, I hope he would not hesitate to come down to the House again, and, if necessary, introduce a different Resolution covering any agreement which was completely unanimous on the part of all concerned. It may be rather Utopian to think that is possible, but my hon. and gallant Friend the Member for Hornseyhas, I think, some reason for putting that point of view, and therefore I hope that no difficulties of a procedural nature would make it awkward in acceptance. However, I still would urge my right hon. Friend that, if he does not think this is the right moment, he would bear in mind that he may not be quite right in saying it is impossible to sacrifice any revenue out of motor taxation.
As I see the Resolution, it apparently envisages the possibility that when the new scheme of taxation comes into effect, whatever it may be, there will be two different kinds of licence charges running—existing motor cars will be charged upon the present basis and new ones upon another basis—

Mr. Dalton: It would not affect the existing class at all.

Captain Crookshank: That may be a little awkward administratively, but possibly it is the only way out. I hope the right hon. Gentleman will look into the problem still further, because it is of vital importance that we should, if we can, go ahead in the export market in motor cars.

4.15 p.m.

Mr. Glenvil Hall: As the right hon. and gallant Gentleman opposite has just said

this is a matter of very great interest to almost everyone. We have, however, to remember the situation in which we are placed today. This Resolution is the one which the ex-Chancellor, the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) introduced with his April Budget, and this one, an interim Budget, carries forward and implements the Resolution as he laid it down. As to agreement among the manufacturers, even supposing it were possible for this Resolution to be withdrawn now, I doubt whether we could get agreement among them. As the hon. Member for Edgbaston (Sir P. Bennett), who speaks with great authority on this subject, has already said, the manufacturers were divided. The majority of them were in favour of this Resolution, that is procedure by small steps and there were others too, I believe, who wanted something else. What all manufacturers and users of cars would be agreed about would be that we should abolish taxation on cars altogether. Obviously, that is not possible. The ex-Chancellor said in his April Budget that he wanted revenue, and my right hon. Friend, as he said last week in introducing his Budget, cannot make any changes now. But that does not mean that at some future time something cannot be done. I think it is quite likely, as expenditure goes down, that something can be done.

Viscount Hinchingbrooke: Does the hon. Gentleman recognise that this is a great moment for doing something, because at this stage designs for post-war cars are coming out?

Mr. Hall: That, of course, is fully realised by my right hon. Friend. Now is always the great moment, but I would not quarrel with what the Noble Lord has said. The fact is, however, that the Chancellor cannot do without this revenue and the only other way of raising it at the moment would be on petrol. My right hon. Friend, I think, carried the House with him the other day when he said that it would be inadvisable, to put it no higher than that, to let this charge fall on petrol users. It would cause a good deal of difficulty, assist the gentlemen who make their living in the black market, and it would add to the cost of living. It is, therefore, undesirable both on those and


other grounds I have not mentioned. Some semi-humorous play has been made in the Debate of a previous speech of my right hon. Friend the Foreign Secretary. None of us likes to sit anywhere with our knees in our mouths, and if we could get more room in cars we should all be delighted. But the speech my right hon. Friend made was not a speech against this proposition as such. It was in favour of the wider steps as against the narrow steps, and on that point my right hon. Friend the Chancellor has still an open mind. It may well be that before the Resolution becomes embedded in the forthcoming Finance Act his mind which, at the moment, is open will be still more widely open.

Captain Gammans: Do I understand that even if all the interests representing motorists, whether manufacturing or users, came along, having reached agreement, the right hon. Gentleman would not be prepared to change the Resolution?

Mr. Hall: I said nothing of the sort. I was not talking about representative associations coming to see the Chancellor. I was referring to an entirely different thing. What I was saying was that manufacturers and other interests have seen my right hon. Friend and that, as he indicated frankly in his Budget statement, the views put to him were in conflict. As he had to come down on one side or the other he has come down, for the moment, on this side, but he has an open mind and is still open to convincement the other way.

ROYAL ASSENT

Message to attend the Lords Commissioners.

The House went; and, having returned—

Mr. Speaker: Mr. Speaker reported the Royal Assent to:

1. Consolidated Fund (No. 1) Act, 1945.

2. Indian Divorce Act, 1945.

3. Newcastle-upon-Tyne Corporation (Trolley Vehicles) Order Confirmation Act, 1945.

WAYS AND MEANS

REPORT [23rd October]

MECHANICALLY-PROPELLED VEHICLES DUTY

Question again proposed "That this House doth agree with the Committee in the said Resolution."

Mr. Glenvil Hall: It is not necessary for me to add much more to what I was saying when that interlude took place. All I can repeat is that my right hon. Friend has got his mind open on this one point as to the size of the steps which, I understand, is the main bone of contention between the manufacturers or, at any rate, between a few of them and the rest interested in this matter. I hope the House will let us have the Resolution now, and postpone any further discussion until the appropriate time.

Mr. Montague: May I, for one moment, be a voice crying in the wilderness? I do not want to take up much time, but I think something more ought to be said on this matter because not everyone agrees with the attitude and philosophy which has been expressed during this Debate. I am inclined to the philosophy of Mr. C. E. M. Joad and when the Chancellor was speaking, I interrupted to tell him, when he said that motorcars were not now a luxury but a necessity, that I would tell that to my constituents. I represent a constituency of 45,000 people, with a population now of about 100,000. I do not suppose one per cent. of them own a motorcar, or have any prospects whatever of doing so and I hope there will be some sense of proportion in this matter because the same kind of silly nonsense, as I think it is, was expressed during Debates on civil aviation, when it was said that soon everybody would own an aeroplane.
God help us when everybody owns an aeroplane and everybody owns a motor car. What kind of civilisation shall we have? [Interruption.] I do not know whether hon. Members would really like a country where everyone owned a motor car or an aeroplane. I should not. I think there is something to be said for a little more simplicity in life, and a little soul, as well as machinery, in our philosophy. I think we are going machine mad. I protest against that attitude. Let us realisethat there is something more in life than rushing about everywhere, under


the aegis of the internal combusion engine, and high octane petrol. Good heavens, have we not more important things to do? Europe is facing starvation and famine; and we can talk about motor cars being a great necessity for everybody, and no longer a luxury. I suggest that they are a luxury. I am not saying, absurdly, that we should have no motor cars, and abolish them. But I do enter this word of protest against the kind of mind there is behind these discussions, and express the hope that the Chancellor will stick to his guns.

4.30 p.m.

Mr. David Eccles: The Chancellor of the Exchequer has told us that his mind is still open on the questions of the steps. I think he has shut his mind to the much bigger question of the amount of revenue which he must get from the motor industry. As these discussions proceeded, I found myself wondering whether the Treasury had considered the effect on employment of insisting on getting a fixed sum from the motor industry, in one way or another way. After all, what we want is expansionist economy. I disagree with the last hon. Member, who suggested that we should treat transport like whisky—as something we should deliberately tax in order to reduce its consumption. I am of the opinion that cheap transport is the basis of a better standard of life for everybody.

Mr. Boothby(Aberdeen and Kincardine, Eastern): Does the hon. Member think it right to treat whisky in that fashion?

Mr. Eccles: I can only say that I like whisky. But when I wake up in the morning, after a day during which I have not had whisky, I do not feel any the worse for the lack of it. I, therefore, conclude that it is not a necessity of life. A fixed amount of money from one level of production of motor cars is a greater burden than if we can spread it over a much expanded production. Is the Chancellor of the Exchequer satisfied that, in sticking to the principle that he must get so much revenue from transport, he has taken into consideration the effect upon the volume of employment? And, secondly, is he quite sure that the export trade has been given its due weight? Can he assure us that this horse-power tax will not, in fact, prejudice our export

trade? Has he looked into that very thoroughly, and come to the conclusion that the small cars are worth while which we are going to go on producing as a result of the total weight of taxation on transport described by the hon. Member for Edgbaston (Sir P. Bennett)? Is he sure he is not paying too much by way of the export trade in order to get this fixed sum from taxation into his coffers? My experience abroad, in recent years, makes me think that there is a much bigger market for the small British car abroad than there used to be, when the population of many foreign countries consisted mainly of very rich and very poor. Obviously, the very rich wanted big cars. But during the war primary producers have had their income levels very much raised, and I think that there is a large stratum of foreign populations today who will want small cars. I am not pessimistic about selling the British small car in countries where it would not have sold very well before. Has the Chancellor of the Exchequer taken all these things into consideration, or is he just following the old Treasury dictate—so many millions from transport?

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

PURCHASE TAX

Third Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Osbert Peake: I wish to offer a few observations to the House and, in particular, to the Chancellor of the Exchequer, on this Resolution. We, on this side, welcome these exemptions from the operation of the Purchase Tax. Our only complaint about them would be that the Table is not sufficiently extensive, and that there is still a considerable number—I think I might say a large number—of articles which come into the field of necessities, and which are still subject to the operation of the Tax. The Purchase Tax, of course, had two objects when it was imposed. The first was to produce revenue, and in that respect it has been a very useful tax, and has produced, I think, £100,000,000 a year. The second object was to act as a deterrent to spending by the public. It is not among the best of our taxes, because


it weighs, undoubtedly, more heavily on the poor, than it does upon the more well-to-do. It is, therefore, desirable in the near future to achieve a substantial reduction, and a wider field of exemption from Purchase Tax.
At the same time, while we should all be agreed, I think, upon that, it is very important that the method by which the Chancellor proceeds, either to reduce the rate of tax or to make exemptions from the field of the tax, should not itself inflict injustice and hardship upon any section of the community. As the House knows, the Purchase Tax is leviedon the first sale of any article, as a rule, at the manufacturing stage, and it therefore follows that the stock in the hands of wholesalers and retailers includes in itself value in money which has been paid by way of Purchase Tax, and there is a danger that wholesale and retail traders may find themselves suffering a substantial loss upon the stocks that they hold, if the rate of Purchase Tax is substantially reduced upon any range of articles, without due notice. Moreover, not only may injustice be inflicted upon retailers and wholesalers, but inconvenience may be inflicted upon the general public, because, as the date of the Budget approaches, wholesalers and retailers may refrain from taking supplies, because of the fear of incurring a heavy loss when the reductions in tax are announced. In that way, the normal and smooth channels of distribution may be disturbed. There may be times, shortly before a Budget, when retail stocks are unduly run down, and there may be heavy purchases made immediately after the announcement of a reduction in Purchase Tax.
It may be said that wholesalers and retailers had an opportunity, when Purchase Tax was first imposed, of making a fortuitous profit, which should be available to meet any losses which may now fall upon them through a reduction in the rate of tax. But that, of course, is not so. As the right hon. Gentleman knows, price control regulations did, in fact, prevent retailers and wholesalers advancing their prices upon stock which they held at the time when the Purchase Tax was imposed, and it would, therefore, be a clear injustice if they were to be involved in heavy losses when the tax is reduced. It is not, as a rule, the sphere of the Opposition to

suggest ways and means to meet difficulties. As a rule they are content to pose the difficulty, and leave it to the Government to find, if they can, a remedy.

4.45 p.m.

It is perfectly clear, I think, that it would not be possible to introduce a scheme of rebates to retailers and wholesalers to deal with this matter. Administratively, it would be far too complicated, and would involve an enormous amount of accountancy. Nor would it meet the case if long prior notice were to be given of impending reductions in the rate of Purchase Tax. A possible course the Chancellor might consider taking is, instead of maintaining the Purchase Tax at a high level and then suddenly, and without notice, reducing it or abolishing it altogether, he might devise a scheme by which the rate of Purchase Tax declined gradually over a period of, say, six months or a year. In that way the hardship inflicted upon traders would be mitigated, and the smooth channels of distribution would be maintained. This is a difficult subject. This case of hardship does not arise to any substantial extent in respect of the goods named in this Resolution, but it is bound to arise increasingly as the Purchase Tax is reduced over a wider field.

I would therefore ask the right hon. Gentleman and his advisers in this matter—I think they are the Board of Customs and Excise—to give careful consideration to what I have said, in order that all sections of the community, not only the retailers and wholesalers themselves, may be protected against heavy losses on their stocks, but also that the great purchasing public may be assured of getting a steady flow of goods. I hope therefore that the Chancellor, although I cannot expect him to give me a detailed answer this evening, will take carefully into consideration the views which I have placed before the House.

Lieut.-Colonel Sir Ian Fraser: I understand that the Amendment to include wallpaper in the Table is not being called. I am sorry, because British wallpaper is admirable, and its inclusion would give pleasure. In the circumstances I and my friends wish to present to the Chancellor the case why the wall paper industry should meet with special consideration from him. I am a director of a wallpaper company, and therefore


have an interest in this matter, which I would like the House to appreciate. That also gives me an opportunity of knowing something about it. [An Hon Member: "Not always."] I think in this case it does. In one of the broadcasts which may or may not have contributed something towards winning the Election, made, I think, by the right hon. Gentleman the First Lord of the Admiralty, he spoke of combines, and flourished the case of the wallpaper combine before the public. It struck me that he of all people might have kept silent about combines. The company I represent is not part of a combine but one of those small active personal British industries which have done so much to make our country rich, and to extend our export and home trade. There are many small companies in this industry competing with each other and with the big group, and no prejudice should exist against the industry on account of what the right hon. Gentleman said.
There seem to me to be two or three principles which should guide this question of taxation. One is the amount of money that will be obtained by taxing a particular commodity. By a coincidence the Purchase Tax was put on wall paper just about the time when wallpaper ceased to be manufactured. Wallpaper, together with carpets and certain other commodities, was completely put out of business by the war because it was not essential to the winning of the war. Because the machinery of the industry is not capable of being adapted to the manufacture of any other article, the makers had to embark on entirely new and strange methods of manufacture. They all did their best to help carry out war contracts and to make things strange to them. They did very well in their contribution to the war effort.
How much are they handicapped by comparison with other industries, which even when they went into war production, were making goods which they were accustomed to make, and retained the skill, knowledge and men necessary for them to start up again in peace time. This industry went completely out and had to make a fresh start. They have been helped by the enlightenment of the previous Government, which gave them allocations of paper, patted them on the back, and said, "Get on with the job. We want cheap wallpaper for the people

at home, and we want you to get back in your export markets, which were valuable and could be much more valuable in the future." A further point is that wallpaper goes into houses, and the right hon. Gentleman may be interested to know that before the war 95 per cent. of all the houses in this country used wall paper. It is, therefore, a very widespread commodity, and a very popular one. Not only does it go into new houses but it is particularly adaptable in making bright and gay and clean houses that have been damaged, because it covers all the cracks and presents a smooth surface, which no paint or distemper can do. Rich people use paint, which involves a great deal more labour in preparing the surface.
Here is a commodity, now becoming available by the action of the previous Government, now entering on this fresh lease of life and hoping to compete in the world's markets, handicapped for the first time by what is, to this industry, new taxation. Wallpaper has not been taxed because there has been no wallpaper. The Chancellor is in fact putting a new tax on this industry at the time of its rebirth. I suggest that that is grossly unfair on grounds of equity. The rival of wallpaper is, of course, distemper paint, upon which there is no tax, nor was it prevented during the war years from continuing its good and valuable work. If the question of equity between one industry and another is taken into account, there is, it seems to me, a very strong case for this particular commodity about which I am speaking. The whole industry has got together and has been to see the previous Government about supplies of paper. The manufacturers, the distributors and the two trade unions concerned are equally in it, and today I speak for all them in asking the Chancellor to take into account what I believe are very powerful arguments why this particular commodity should be freed from this tax, which is to the industry a new tax.

Mr. Renton: I have a short and simple point to put. I make it entirely from the point of view of the consumer. We are sometimes inclined to forget that there are several million people in this country who have no gas or electricity in their houses, and are entirely dependent on the paraffin lamp to lighten their darkness. At the present time there is Purchase Tax still on lamp glasses, the


ordinary glass with a bulge in it, which is used with paraffin lamps. The hundreds of thousands of people, particularly in rural areas and in bombed out places, are finding that having to buy these lamp glasses is a considerable item in their family budget, having, as those of us who use these lamp glasses know, to replace them rather frequently.
I regret, for several reasons, the omission of lamp glasses from the Table appended to this Resolution. First, I have been in correspondence with the Financial Secretary to the Treasury on the subject, and have received what I thought was rather a favourable reply, to the effect that the matter was being considered. I was surprised to see this omission from this Table, all the more so because it is quite clear, reading between the lines, that the purpose is to assist, in an ancillary way, the housing programme. All the other items mentioned are those which people will need when they start to fit out new houses which are to be built, or houses which have rather fallen out of supply during the war years. The fact that in many cases new houses are to be fitted with gas or electricity is no answer to the simple point I am making, for the reason that in many rural areas houses of a permanent nature will be built, we hope, without waiting for electricity lines to be brought to the particular spot where the houses are to be built. We shall, therefore, still have new houses in which paraffin lamps will be used. For those reasons I hope that the Chancellor will see his way to include lamp glasses before any finality is reached in regard to this Resolution.

Mr. House: I wish to support the case put forward by the hon. and gallant Member for Lonsdale (Sir I. Fraser) in regard to wallpaper. This is a commodity which will enter into poor homes. The Board of Trade can control the price and type of wallpaper, so if the Purchase Tax is taken off it will be a constructive move towards helping working-class homes. There must be millions of working-class people who take a pride in their home to the extent of doing their own redecorating. If wallpaper is cheap it will help those people, and give them an opportunity of brightening their homes. The object in removing the Purchase Tax from the commodities mentioned in the Table is to help

in cheapening housing essentials. There are some hundreds of thousands of working-class homes which are badly in need of improvement and brightening. It is only fair that opportunity should be given to those people, either by direct purchase themselves, where that is the practice, or with the assistance of the landlords, to carry out this work, or have it carried out by the landlord.
The hon. and gallant Member for Lonsdale has pointed out the significant fact that distemper paint does not carry Purchase Tax. On the other hand, wall paper does, and I suggest that there is a degree of inequality there that should be removed. It is also significant that the wallpaper industry has been practically closed down since October, 1941, which means the same as saying that the Chancellor has not been deriving any financial benefit from the continuance of that tax. Therefore, on financial grounds, the removal of this tax can very well be afforded and on grounds of equity that action ought to be taken. In the interests of raising the standard of brightness in the homes of the common people, I submit that this is a proposal which merits the favourable attention of the Chancellor, and I hope he will give it effective consideration.

5.0 p.m.

Mr. I. J. Pitman: I rise to request the inclusion of office machinery in this Table. Office machinery is, undoubtedly, an important factor in efficiency. I was Director of Organisation and Methods at the Treasury, and I am glad to say that under the Chancellor the Treasury has office machinery experts who are real leaders in this particular field. I would suggest that if the Chancellor wishes to know the degree to which office machinery, and what might be called efficiency systems and intelligence applied to the office, can contribute to the welfare of the common man, he only has to ask his own Department. Customs and Excise also possess the finest battery of office machines in existence anywhere. The other day there was published a report about the extremely efficient way in which the Civil Service was going to solve problems set them by the Royal Commission on population. If the Chancellor looks into that he will see the way in which literally years of man hours can be saved by a judicious use of office machinery.


It seems to me that the distinction between productive machinery which is tax free, and office machinery which is subject to a purchase tax of 33⅓ per cent., is most difficult to justify. It may be that nowadays so many firms pay E.P.T. that, in point of fact, it does not matter to them whether they pay more for machines or forms than the real market price, but, as the hon. Member for South Cardiff (Mr. Callaghan) pointed out in a very able speech the other day, the one thing which the Chancellor does not wish to do is to encourage what might be called a "trigger-happy" attitude about E.P.T., but rather the reverse. I think he will agree that, on the whole, firms have played the game extraordinarily well in maintaining their standards of price. Let us also not forget that there are a lot of coming-up firms not earning big profits which are thinking and acting in terms of true price rather than of the price after taking E.P.T. into consideration, deterred by this extra 33⅓ per cent. being clapped on to an expensive item. If the Chancellor is making the point that we are seeking to avoid inflation, I think there is an answer to that because at the Board of Trade there is the Directorate of Office Machinery which allots the very great under-availability of machines to those who can genuinely show the biggest saving from their use. The Chancellor, therefore, need have no fears that by extending the availability of price of machines he will be increasing the quantity used. All he would be doing would be to make available the machines to the small as well as to the big firms according to their real needs.
At present in the Finance Act there is a differentiation between industrial use and office use. In practice this has led to some curious anomalies. If a man picks up a sheet of emery paper it is free of Purchase Tax, but if he picks up a sheet of carbon paper he has to pay tax. Time clocks seem to come into all sorts of anomalies. If you use them in the factory they are free of tax but if you remove them into the office and use them you have topay tax. Steel tables with special fitments for the proper sorting of papers are free of tax in one form, but if you use them in the drawing office you have to pay tax. A production control device like the Colourdex system is regarded as a production tool, although in point of fact it never leaves the office.

Similarly, an ordinary production system of the Cardex kind in the office is treated like a lathe or any other production machinery. Time cards, although they originate in the factory—in fact all forms, whether they originate in the factory or in the office—are subject to tax. It seems to me that there is a mass of anomalies as well as a taxation on efficiency.
For those four reasons I think there is a good case for exempting from taxation of this kind the tools of the trade of the office as much the tools of the trade of the factory. It may be that the Chancellor can assure us that he will take it up at a later stage, but I would earnestly ask him to give the House an assurance that he will, either now or later, include some fresh categorisation for exempt items. I do not think that the categorisation at present in use is satisfactory. I do not think it would be difficult to get a new one. I suggest that we could get a ruling by the Directorate of Office of Machines at the Board of Trade which would be quite satisfactory. I admit that some people might want to sit on an office chair in their own homes, but nobody wants an enormous punched card tabulating machine in their bedroom. I think this problem is capable of being solved in a realistic way, and I hope the Chancellor will do so.

Sir Patrick Hannon: I endorse the plea which has been made by my hon. Friend on behalf of office equipment. I hope the Chancellor will take it to heart, as indeed he takes to heart all suggestions which have been made in this House. I wish to call the Chancellor's attention particularly to the grave effect of Purchase Tax on the sale of motor cars in this country—the car which the Chancellor wants to give to everybody in the country in the new era. The Chancellor knows more than anybody how much the export trade, which it is his positive purpose to develop and extend, depends on the ability to purchase in this country. Therefore, the cost of production in this country should be reduced as much as possible. Before the war, motor manufacturers in this country produced decent respectable cars, in which anybody would like to travel, for a cost of between £350 and £500. With the increasing cost of labour and of materials, and with the controls which the Chancellor and his colleagues are placing on production in


this country, such a car would cost £800. If you add to that Purchase Tax, what chance has the manufacturer to assist in the export trade? I know the Chancellor has the best of intentions, and no doubt he wishes to do the best he can in the days to come, but I would suggest that he should consider the extent to which he can modify the Purchase Tax which is now a burden on the producer of cars in the home market, and which consequently affects the export trade.

Sir W. Wakefield: I ask the Chancellor of the Exchequer to give sympathetic consideration to the remission of the Purchase Tax on London taxicabs. I hope that when I have put the case he will feel that there are good reasons for removing this tax. This Purchase Tax was imposed, as the Chancellor knows, and if I may be permitted to remind the House, by the Finance Act (No. 2), 1940, and it is one-thirdof the manufacturers' price of the vehicle. Taxicabs are chargeable with the tax in exactly the same way as private motor cars, but exemption is given in this Act to omnibuses and other classes of public service vehicles, and to commercial goods vehicles as well.
I submit to the Chancellor that the London taxicab is a very special class of road vehicle, and that it is easily distinguishable from any other vehicle, as I am sure the Chancellor will agree, having regard to the times which he has ridden in it. We all know that if a London taxicab strays into the country it is well recognised. No doubt, the same applies when one strays into Palace Yard. It is not easy for any other car to be mistaken for a London taxicab. The reason is that London taxicabs must comply with the Metropolitan Police conditions of fitness. These conditions produce a vehicle very different in many respects from the ordinary private motor car. I make this point because when this remission of tax was requested earlier this year, the right hon. Gentleman the former Chancellor of the Exchequer, in refusing to give this remission of tax, said that cars plying for hire are very often indistinguishable from cars in private use. He went on to say:
Accordingly I could not exempt such cars as a class, nor could I contemplate special exemption from Purchase Tax of any limited class of special design, such as London taxicabs, which it might perhaps be possible to distinguish, while leaving the others subject

to tax."—[OFFICIAL REPORT, 12th April, 1945; Vol. 409, c. 1998.]
But London taxicabs are subject to very strict regulations and the London cab owner cannot, as many provincial taxicab owners can, buy a second-class private car or limousine, license it and use it as a taxicab. It would not satisfy the strict conditions of the Metropolitan Police. Only new and specially-designed vehicles can be added to the existing number of London taxicabs. The demand for these vehicles is small, and consequently manufacturers' prices are high. The reasons are twofold. First, as we all know, because numbers are small, production cannot be great, and it is great production which tends to reduce cost. The second reason is that police conditions require a vehicle which would cost more to build than an ordinary private car, even though the builders had an order for an equal number of vehicles. Those points are worthy of consideration.

5.15 p.m.

Before the war, the price of a London taxicab was about £400. I understand that it has now increased, without Purchase Tax, to something like £750. To put Purchase Tax upon a vehicle of that type brings it to about £1,000, which is a high figure for a small man to have to pay. Many ex-Servicemen may come back wanting to run their own taxicabs, and we ought to give every encouragement to the small man to do so, rather than to big organisations. For that reason the Chancellor of the Exchequer ought to consider favourably remitting this Tax. The amount of money obtained from the Tax is very small, but the disadvantages of obsolete taxicabs, the effect in raising the fares, etc., far outweigh the small amount of money which the Chancellor gets from continuing this tax. We want new designs. We want our London taxicabs to be the best in the world, but if the Purchase Tax is maintained upon them it will hinder that objective from being achieved and will be an obstacle to the small man owning his own cab. I suggest that it is not in the general public interest that this tax should be continued. I hope that the Chancellor will consider with sympathy what I have said and, when the proper time comes, remit this Tax, for the general public benefit.

Major Boyd-Carpenter (Kingston-on-Thames): I rise to support the plea which


has been made from both sides of the House with respect to wallpaper. If one looks at the list of articles to which the Chancellor is ready to apply this most welcome concession, they all appear to support the rehousing problem, of which we hear so much and see so little. Wall paper would seem to fall within that category. The dialectical skill of the Chancellor is well known, and I shall be interested to see whether he is able to establish any differentiation in principle between wallpaper and the articles to which he is prepared to extend the concession. They are all actually required for the rehousing programme of which we hear so much and see so little.
An hon. Member has already mentioned distemper paint, which is free of Purchase Tax. Generally speaking, this paint is used in what one might describe as the luxury house, but wallpaper is more often used in the houses of the poor. It would be a trifle strange if in this first Socialist Budget hon. Members were not to support a proposal which was designed to soak the poor [Interruption]. I hope the hon. Member opposite will consequently support out appeal. It is in the light of that consideration that I would ask the Chancellor of the Exchequer to consider this matter. Wallpaper is a commodity which, if the housing programme develops, will require to be very freely used. In his academic days the Chancellor was very fond of referring to first principles. The first principle of the Purchase Tax is to limit and discourage consumption. It will be interesting to hear whether the right hon. Gentleman desires to discourage consumption of the articles required for rehousing. If it were so, it would cast an illuminating, if somewhat sombre, light upon the prospects of our people getting the houses which they so desperately need.
Lieut.-Commander Gurney Braith-waite: When the Chancellor last week announced this range of concessions to the Purchase Tax payer, I confess that I fell under his rhetorical spell, and I did not forbear to cheer, but there has since been time for reflection—sober reflection. After somewhat uneasy nights, considering the proposals made by the right hon. Gentleman, I have come to the conclusion that, not for the first time in my life or in the lives of other hon. Members, we have been witnesses of a performance

such as used to delight and mystify us in our early days, by the late Mr. J. N. Maskelyne, who was an expert in sleight of hand and illusion. The Chancellor will find himself portrayed with unerring accuracy in "David Copperfield," in the illustrations by Phiz. I do not know whether the right hon. Gentleman remembers when the hero of that book, young David Copperfield, was on, his way to school, and stopped at a country inn where his dinner had been ordered for him. The waiter, after placing before him mutton chops and a glass of beer, whisked them away from under the boy's nose, on the ground that they were injurious to the young, but perfectly suitable for consumption by the waiter himself. The Purchase Tax Resolution comes within the same category.
Yesterday, the right hon. and gallant Member for West Bristol (Colonel Stanley) described the business which we have before us now as not so much a Budget as a prophecy. The Chancellor of the Exchequer, he said, had laid before us certain hopeful eventualities in April next. This Resolution covers a concession, however, which we are going to receive here and now. The right hon. Gentleman made a great deal of the fact that Purchase Tax was now to be removed from certain articles essentially connected with the housing problem. I have had the opportunity of going through the Schedule, and I am able to congratulate the Chancellor of the Exchequer on the generosity which we always associate with Socialism, since he has swept away the whole of the Purchase Tax upon the unobtainable. It is a gesture. I do not know whether it is part of the tonic which is supposed to be applied to our national spirit, but there it is. The housewives of Great Britain will be able to place their hands on their hearts after they have read the report of this Debate tomorrow, and say unanimously to the right hon. Gentleman, "Thank you for nothing." Much more might have been done in removing the Purchase Tax upon essentials. Various suggestions have been put forward. My hon. and gallant Friend the Member for Lonsdale (Sir I. Fraser) and others have stressed the importance of wallpaper. I expected some hon. Gentleman to follow with a plea for linoleum, which is a very similar commodity.


My hon. Friend the Member for Bath (Mr. Pitman) pleaded for office machinery and my hon. Friend the Member for St. Marylebone (Sir W. Wakefield) put in a plea for the removal of Purchase Tax on London taxicabs, another commodity almost unobtainable. At any rate, here is a fairly wide range of suggestions. I know what the right hon. Gentleman will say in reply. I can anticipate the reply with reasonable accuracy. It will be that, worthy as all these suggestions are, and though without exception they have struck a sympathetic chord in the heart of the right hon. Gentleman—whose intentions are strictly honourable—yet the financial situation prevents him from making any further concessions.
I think I shall be in Order if I suggest a method by which much more could have been done in the way of easing our burdens, if the Government had concentrated not so much upon the incomings as upon the outgoings. Reduction of expenditure should have been tackled with the strenuousness with which some of these concessions are being made. The right hon. Gentleman will be familiar with demobilisation, yet we are holding unnecessarily in the Services many young men and women. That is one of the things which might be tackled between now and next April. Let it be done. When the right hon. Gentleman comes before us next April he must not have this Maskelyne and Devant attitude towards our burdens. The vanishing lady performance must vanish. Nobody can very well oppose this Resolution, because it contains nothing, and it is difficult to divide against nothing. I hope that we shall leave the world of illusion next April and that the Chancellor will then give us the substance instead of the shadow.

Mr. Woods: This Debate ought to be subject to Entertainments Duty. Those who opposed the Purchase Tax on the necessaries of life had very little support from hon. Gentlemen opposite, who have spoken in this Debate appealing for various concessions. The last hon. and gallant Member said, "Thank you for nothing." It is obvious that if things have a Purchase Tax on them, it is not so easy for manufacturers to produce them. In spite of what has been said, these articles are necessary for housing, and the removal of the Purchase

Tax will stimulate production of them and a flow of them in the country. It will also make things cheaper as well as more speedily available. I do not know that the average housewife is particularly concerned about wallpaper and motor cars, but I suggest that my right hon. Friend might consider removing the Purchase Tax from austerity crockery, which, merely because it is not called "utility," still carries the Purchase Tax. It is no use providing hot water in houses, unless there are vessels in which to carry it. One of the anomalies is that because this crockery is not called "utility" it is subject to tax. There is no justification for continuing this tax because most of the people who have to pay this additional charge on the necessaries of life are those who were subject to the blitz or young people who are coming back from the Forces and who want to get married and furnish their homes. I understand that such an exemption could be covered by an Order, and I hope that the Chancellor will make one.
I cannot conclude without paying my tribute to the Chancellor who, in spite of all that has been said on the opposite benches, did a valuable service to house wives when he was President of the Board of Trade by elaborating that system of controls which put on the market various ranges of utility goods which were liberated from the Purchase Tax. I hope that he will now listen to the pleas that have been made to him to extend the principle of removing the burdens on necessaries of life. In doing so he will have enthusiastic support not only from behind him, but, if one may judge from the tenor of the Debate, from those who confront him on the Opposition benches.

5.30 p.m.

Mr. Wilson Harris: I want to express the distress with which I listened to the Chancellor say not only that he did not intend to remove the Purchase Tax from cars, but that he had no intention of doing so for many years to come. I do not speak from any kind of interest in the manufacturing industry and I have no solicitude for it. I am sure that it does not require any, and that it can quite well take care of itself. I am, however, deeply impressed with the social value of the cheap car, the realisation of which the Chancellor now proposes to banish


for several years. The cheap car before the war was an important social institution. The means of transport, particularly transport from town to country, was brought within the reach of many persons with comparatively small incomes who derived from it benefits of many kinds. I have in mind various classes of my constituents, particularly university lecturers and professors. I imagine that even the Chancellor will have a soft place in his hard heart for that meritorious and ill-remunerated class. There is another meritorious and ill-remunerated class in nurses, district nurses and persons of other types to whom the ownership of a small car makes an immense difference.
Then there is the family value of the car. I live in a beautiful country at a distance from a railway station. With the innate selfishness common to human beings, I would prefer to see that solitude remain a solitude, but when I observe the family parties that used to come in their cheap cars on Saturdays and Sundays, I realise what a contribution the cheap car has made to the happiness and health of large sections of the population. I believe that there will be a great sense of deprivation, which is not industrial or economic, in the prospect of the absence of the cheap car, not for one or two years, but, as the Chancellor in his minatory manner has intimated, for a great many years to come. I do not wish to hold up to my right hon. Friend the example of Adolf Hitler, but it will be remembered that some years before the war we had the spectacle of Herr Hitler introducing the idea of "the people's car" to the German people. The thing was a fraud from start to finish, a characteristic fraud of that perverse personality, but it was an intuition that struck home, as so many did. The response of the German people to the idea of a cheap car which would carry them from their homes to work and to the country was such that it met with general acceptance.
I view with great regret the prospect that for some years to come the motor car will be the rich man's luxury and an appanage of the well-to-do. It would be a national advantage if the small car could be brought within the reach of salary earners and the higher wage earners. In the United States the wage earner expects to have a car to take his family about at the weekends, and that is an advantage of which we are deprived

here. Although I am certain that no appeal of mine will move the right hon. Gentleman, I would ask him at least to consider whether he can reduce the term of the Purchase Tax on cars. Could he modify a little the heavy sentence he passed in his Budget speech which banished the most desirable attainment of the return of cheap cars for a number of years to come. If he would tell us that he will keep his mind open until next April, and let the arguments which have been voiced tonight sink into his mind, the distress which weighs so heavily on me will be lightened.

Captain Prescott: I wish to associate myself with the observations made by my hon. and gallant Friend the Member for Lonsdale (Sir I. Fraser) who opened the Debate on this Resolution. My hon. and gallant Friend and I had an Amendment on the Paper with regard to wallpaper. It has not been selected, but we still wish to address some observations to the right hon. Gentleman on the matter. While I in no way wish to derogate from the cases that have been put forward by my right hon. Friends for the freeing of articles and things in which they are particularly interested, I submit that the case of wallpaper is peculiar, particular and unique and worthy of the right hon. Gentleman's special consideration. This Debate has ranged over the question of the Purchase Tax on cars, crockery, glass for paraffin lamps, linoleum, office machinery and other matters. I want to refer to some of the observations which the right hon. Gentleman made in his Budget speech when he dealt with the Purchase Tax. He said:
The Committee will have observed that all the principal taxation changes which I have mentioned so far will not come into force until next year. But there is one relief which I propose should take effect forthwith, and this lies in the field of the Purchase Tax. I propose to abolish the Purchase Tax completely over a certain range of articles of special importance in connection with the housing programme."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1901.]
It is my claim and the claim of my hon. Friends who support me in this matter that wallpaper is of particular importance in the housing programme. I have no financial interest in wallpaper concerns, although if the right hon. Gentleman is familiar with Darwen—nearly all his friends in the General Election were because we increased our majority—or if he were as familiar as his Friends in the


Government are, he will know that it is the home of the wallpaper industry. In the bad years of the cotton industry the wallpaper industry kept it going. We in Darwen, therefore, are gravely concerned about this matter. The mills which manufacture wallpaper were closed in 1941 and no wallpaper has been manufactured during the war. War contracts are now beginning to terminate, and the industry has to restart its economic life. It will play a great part in the rehousing programme and it will be grossly unfair and unjust if wallpaper is to be subject to Purchase Tax of 33⅓ per cent. while paint and distemper, the two main alternatives for finishing rooms, are subject to no tax.
The Amendment put down by my hon. and gallant Friend and me was on the Order Paper yesterday or the day before, so that it will have come to the notice of the right hon. Gentleman that we intended to raise the question. No doubt he will have ascertained what revenue would be lost if this concession were granted, and I shall be grateful if he will inform us what the sum is. I hazard a guess that not a very large sum would be lost to the Revenue if it were made. My main claim is that wallpaper which is used in 90 per cent. of the homes of the country, particularly the poorer class homes, is an essential for the new rehousing programme. As the right hon. Gentleman said that the concessions in the Purchase Tax were to help the housing programme, it would be in the interests of that programme that this concession should be made. It would be interesting to know whether the Chancellor has consulted the Minister of Health as to his view. It may well be that the Minister of Health would welcome any assistance he could obtain even in a small matter like this.
The second basis on which we put our plea is that this industry has been severely penalised during the war because it has had its production completely stopped. Our plea is not put on any profit basis, however; it is put on the basis that there will be discrimination against it if this concession is not granted. I am grateful to my hon. and gallant Friend the Member for Kingston-upon-Thames (Major Boyd-Carpenter), who supported our Amendment for drawing attention to the fact that this alone, of all the matters

which have been mentioned in this Debate, is vital to the rehousing programme. If the right hon. Gentleman must refuse the concession, I hope he will be able to give good reasons why he deems it in the national interest to do so. Wallpaper is in the homes of the poor. There may be different kinds of wall paper, but we claim this concession in the interest of the rehousing of the ordinary people.

Mr. Sidney Shephard (Newark): I wish to support my hon. Friend's plea, but only partially, because I cannot see his point that all wallpapers should be exempted from Purchase Tax. Some wall papers are expensive and are undoubtedly luxuries, and my hon. Friend has not made a case for their exemption. Most wallpapers sold, however, are for working-class homes, and I suggest to the Chancellor that he should consider, in conjunction with the President of the Board of Trade, whether there cannot be some small utility range of wallpapers at fixed prices which should be exempt from Purchase Tax. If that could be done, most of the points raised will be met.

5.45 p.m.

Squadron-Leader Hollis: I merely want to make one simple and largely sanitary plea, and that is for baths. One of my hon. Friends accused the Chancellor of a desire to soak the poor, but here is his chance to soak us all. Almost every household and building appliance is to be exempt from Purchase Tax except the humble bath. Every method of heating water is exempt, very properly, from Purchase Tax, but once the water gets into the bath it has to pay through the nose as much as ever. I need not keep the House long on this point; although the Chancellor may often say that he sympathises with a particular plea, it is clear that he nevertheless has to find a certain amount of money and must therefore harden his heart. But obviously there is no sense whatever from the financial point of view in charging Purchase Tax on a commodity which is to form part of something which is going to be subsidised. I appeal to him to round off his case and make it entirely logical by allowing us to have our baths again.

Mr. Dalton: We have had a long and interesting Debate on this Resolution and a number of very persuasive speeches have been made on behalf of a large num


ber of different commodities. All those who have pleaded for the Purchase Tax to be taken off that which they would prefer it to be taken off would nevertheless agree, I am sure, that at this stage of our financial history it would be quite impossible to accede to all the requests that have been put before me, and I hope therefore that I may have the support of many hon. Members who have spoken in resisting the claims made by others of their number. Broadly, the position is this: as I sought to explain in my Budget statement, a great inflationary danger is at the moment hanging over us. It is essential that people should not have more money until there are more goods to buy. Every reduction of Purchase Tax is in some degree, large or slight according to its importance, an inflationary operation. Every reduction in the price of articles now taxed releases part of the money that would otherwise have been spent on those articles to run after other goods. That is why I have reached the conclusion that at this moment I must confine the Purchase Tax reliefs to a very narrow range of articles and a very small sum of money, and that was why I concentrated the proposals for relief upon this small but clearly denned group of articles—domestic cooking, space heating, and water heating appliances, together also with refrigerators.
I consulted some of my colleagues on the matter and made it clear that I could only make a limited concession now, and it is the view of the Government as well as my own view that this concession is best concentrated, in the interests of the housing programme and of the community, on this particular group of articles. It is of course perfectly true that many other things go into a house besides a refrigerator and an electric stove, and some of those things are subject to the Tax, I admit. There is a very large range of articles entering into house construction, or rather into the proper equipment of a house when built, and the total of those articles goes far beyond the present possibilities of remission which I can offer to the House.
At the moment I cannot agree to any extension of this list, and indeed I am not quite sure whether I have not perhaps gone a little too far in making this early beginning with Purchase Tax remission. This, however, is an interim Budget, there will be another before long, and between

now and next April I will most certainly consider with very great attention at any rate those articles in regard to which it is easiest to make a strong case for the total remission or abatement of the existing rate of tax. I shall be disappointed if, when April comes, I cannot move a little further. I do not want to commit myself in detail, it would be wrong to do so now but I hope it will be possible to move a little further along the road of reducing Purchase Tax over a selected range of articles, and in deciding what that range, if any, shall be, I will naturally consider those which have been proposed for remission by various speakers today. In regard to wallpaper, the hon. and gallant Member for Darwen (Captain Prescott) asked how much we got from it now, and one speaker, advocating the remission of the tax on wallpaper, said he doubted whether we got anything.

Captain Prescott: I asked how much.

Mr. Dalton: I think one hon. Member did say that I was getting nothing from it, and it was even said that no wallpaper was being made. But this year we are getting close on a quarter of a million pounds from the Purchase Tax on wallpaper when, admittedly, the rate of production is very low. I hope and believe the wallpaper industry will increase its production very quickly in the course of its reconversion from war to peace work and with the release of workers from munitions and from the Forces.

Mr. House: What tax did the Chancellor receive, say, in the year 1942–43?

Mr. Dalton: I am answering the question as to what I am getting now, and the answer is that in the financial year 1944–45 we got £225,000. This year we shall certainly get more than that, and next year we shall get more still, assuming the tax remains, because we shall then be swinging back in the direction of full production. This only illustrates how one small article can help to feed the Revenue, and I wish to say quite bluntly that I can give no undertaking to sweep the whole Purchase Tax away. That would be a piece of financial stupidity of which I am sure the House would not wish me to be guilty. If we are to balance our accounts, if we are to meet necessary expenditure, whether in the field of social advancement or in the field of defence, we must keep this tax in such a way as to bring in a very substantial


revenue, and that revenue must be obtained from those articles which can not be described as being the necessities of life. That, however, does not exclude the possibility of looking forward a little to a substantial extension of the field of complete remission on the one hand and of reduction on the other. I will consider all the cases that have been put forward with every intention to do as much as I can next April, having regard to the needs of the Revenue and the danger of inflation, which will not have wholly disappeared next April but will still remain.
I was asked about the administration of the tax. Here ofcourse I am dealing with an inheritance; the whole Purchase Tax is inherited from the late Coalition Government, and that is true of the administration as well as of the rate of the tax. My right hon. Friend who used to be Financial Secretary to the Treasury, who put these points, will be aware that now, as when he was at the Treasury, there is provision whereby traders are able to charge tax-inclusive prices on tax-paid stocks. We do not propose to change that, but we will look into it and see whether the present arrangements, which are designed to prevent injustice to traders consequent upon a reduction of the tax, can be improved.

Mr. Peake: The point I was trying to make was this. When goods become more plentiful and it is announced that the Purchase Tax is either reduced or abolished over a certain range, the public will expect to buy the articles straight away at the reduced prices. The system which my right hon. Friend has just mentioned will not in fact be able to be operated under those conditions.

Mr. Dalton: I am not sure that it will not, but I undertake to look into it. I should have thought that this was a desirable provision in the interests of the traders, and to remove this safeguard would be widely held to be unjust. After all, it will not take very long for stocks held by traders on which tax has been paid to be cleared, it cannot be more than a matter of a month or two, and I should have thought that the present arrangement would have met future requirements. I will however see whether it can be improved in any way.

I do not think I should be justified in going into detail on the various cases that have been put, except that I should like to speak about motor cars. I have tried my best to please the motor industry. I sought their views, I longed for unanimity and I got divided opinions. I have to exercise my own judgment upon recommendations which are not unanimous. But on one thing they were unanimous: they said they wanted to know where they were about the Purchase Tax, they would much rather have a definite statement. I have tried to oblige them, and I have told them that so far as cars for home use are concerned it is not possible for me to take off the Purchase Tax yet. Cars which are exported of course pay no Purchase Tax. I was asked to give a definite statement and leave the motor industry in no doubt—

Mr. Wilson Harris: Has the right hon. Gentleman paid quite as much attention to the desires and wishes of the community as a whole as he has to those of the motor industry?

Mr. Dalton: I thought it best to say, quite frankly, that I do not rate the Purchase Tax on motor cars to be used in this country as at all high in the list for consideration of relief. There are a great many other things I would sooner take the tax off than motor cars. In speaking frankly about it I hope I have met the wishes of the motor industry and others who have made representations to me. It was better that I should say that I do not see my way now, and do not expect to do so for some while to come, to remove the Purchase Tax from motor cars, and I repeat that so far as the Purchase Tax in general is concerned I regard it as being, for the future, a most necessary and I hope a most prolific source of public revenue.
What it has brought in up to now is very little compared with what it may well bring in when we resume our production on a large scale, even if I am able, as I hope I will be, substantially to extend over the period that lies ahead the range of complete exemption and of reduction on the existing rates. I hope I shall be able both to reduce the tax and to get substantially more revenue, but for the moment I hope the Committee will not press me to make any further changes as far as the remaining few months of the present financial year are concerned, since


I give an undertaking that I will carefully and hopefully go into the matter between now and next April.

6.0 p.m.

Colonel Stanley: While hon. Members on this side are grateful to the right hon. Gentleman for the manner of his reply, we are frankly disappointed at the matter. I quite agree with the right hon. Gentleman that this tax as a whole is one that it is quite essential to maintain, and I sympathise with him in the rebuke which he administered to his hon. Friend the Member for Mossley (Mr. Woods) for a suggestion which the right hon. Gentleman rightly described as great financial imprudence.

Mr. Woods: May I point out that I did not advocate the complete abolition of the tax at this stage? All that I suggested was that it should be removed from those things which can truly be described as necessary and not from luxuries such as motor cars.

Colonel Stanley: That was my understanding of what the hon. Member said, and I am sure that when he has read in Hansard the report of the right hon. Gentleman's remarks, he will point out how mistaken that rebuke was.

Mr. Dalton: It was not a rebuke; it was a kindly observation.

Colonel Stanley: There is, I think, a difference between agreeing that the tax as a whole must remain and agreeing that under no circumstances at this moment can there be any further alteration. We on this side feel that the right hon. Gentleman having agreed to certain alterations, neither the amount of purchasing power which has to be mopped up nor the balancing of this year's Budget can be estimated so precisely that it is possible to say that the addition of one or other commodities, for which good reasons can be advanced, could upset that balance. I can quite see that when it is a question of motor cars, a big point is raised which would be likely to upset the balance. I appreciate the reason why the right hon. Gentleman made a very definite statement that motor cars would not be removed for some time. I realise that with the uncertainty a number of people who might otherwise have bought cars were holding off, and the situation was made extremely

difficult. Therefore, I should not press for motor cars to be removed now. All that worried me was the argument advanced by the hon. Member for West Islington (Mr. Montague), an argument to which I hope the right hon. Gentleman will not listen. The hon. Member said that he did not like motor cars, that he thought the increase in the number of motor cars was a bad thing, and for that reason he did not want the tax to be taken off.I am sure the Chancellor will not be influenced by that opinion, even when it comes from an hon. Member who has for so long represented in the House the views of the party opposite upon civil aviation.
But I think these considerations are rather different when we come to the commodities that have been mentioned, wallpaper and possibly utility frocks, or what an hon. Member called austerity frocks. I am today wearing a pair of what I have hitherto called utility socks, and certainly I shall refer to them in future as austerity socks. We on this side feel that a very good case has been made out for wallpaper, which is an essential part of our rebuilding programme, to be included in the list, and we feel there may be other commodities in that category. We do not propose today to take this matter to a Division owing to the fact that the Amendment has not been called. If we were to press the matter to a Division, we would have to divide against the omissions, of which we are all in favour; but I give the right hon. Gentleman notice now that when we come to the Finance Bill we shall move Amendments on which we hope the right hon. Gentleman will prove more yielding than he has been today and which we certainly shall press to their logical conclusion.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Fourth Resolution agreed to.

TAX-FREE PAYMENTS

Fifth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Captain Crookshank: May we have a brief explanation of this Resolution?

The Solicitor-General (Major Sir Frank Soskice): The House will be aware that under the Finance Act, 1941, it was enacted that when a fund had to pay a beneficiary an annual or other payment free of Income Tax or free of Income Tax and Surtax, it should be proportionately reduced according to a specific ratio in order to avoid the burden upon the trust fund being made too heavy because of the increase in Income Tax and Surtax above prewar rates. Suppose that a fund of, say, £400 had to pay a tax-free payment or a payment tree of Income Tax and Surtax, the result might well come about, owing to the great increase in the rate of Income Tax and Surtax which took place when the war began, that the fund could virtually not stand the amount necessary to pay the tax-free annuity or other payment; that is to say, to pay the same amount free of tax as you had to pay before the tax rates were increased, you would have to pay such a large sum that the fund itself might not be adequate to pay that increased annuity or other periodic payment. In order to prevent that coming about, Section 25 of the Finance Act, 1941, was put into effect.
Briefly, that Section provided that the trustee of the fund should be entitled to reduce by a certain proportion, which in point of fact was worked out at 20–29ths, the amount of the annuity or other periodic payment which he had to make out of that fund. The result was that, in effect, the annuitant or beneficiary had himself to bear the increased incidence of tax upon his annuity. In terms that Section applies only when tax is at 10s. in the £. The Resolution proposes to enable the Finance Bill to include a Clause which will provide a sort of sliding scale so that the reduction in the annuity can be altered according as the tax is reduced. By that I mean that when the tax is at 10s. in the £ the trustee can reduce the amount that he has to pay by way of annuity or periodic payment to 20–29ths of the amount which he had to pay before. When the tax goes down to 9s. in the £, it is obviously fair that he should pay rather more in respect of that annuity than he had to pay when the tax was at the higher rate of 10s. in the £.
It is proposed to introduce into the Finance Bill a sliding scale which will operate in this way. With the tax at 10s. in the £, the trustee has to pay only

20–29ths of the amount that he had to pay before the tax was increased above prewar rates. With the tax at 9s. in the £, each pound of the trust fund will be available to a larger extent to pay the same annuity. Therefore, the annuity should be proportionately increased. When tax is at 9s. in the £, the sliding scale will operate with the result that instead of the trustee paying 20–29ths of the prewar annuity, he will pay 22–29ths. Roughly speaking, the fraction is worked out in this way. You increase the amount of the annuity which the trustee has to pay according as he has more of each pound of the trust fund available to pay that annuity. With the tax at 10s. in the £ he has only 10s. available; with the tax at 9s. in the £ he has 11s. in each pound available to pay the annuity. The Finance Bill will include a sliding scale which will be necessary to provide that as the tax decreases trustees shall have to pay a gradually increasing amount of the prewar annuity or other periodic payment which has to come out of the fund.

Sir P. Hannon: Where does the Solicitor-General get the denominator of 29?

The Solicitor-General: Let me put it in this way. Suppose that a trustee has x pounds in hand and as a trustee his obligation is to pay a periodic payment which I will call y pounds a year. When the tax was at 5s. 6d. in the £, the trustee had available on each pound of the trust fund £1 less 5s. 6d., in other words, each pound could provide 14s. 6d. of the annuity. When the tax went up eventually to 10s., the result was that instead of having 14s. 6d. of each pound to pay the annuity, he had only 10s. of each pound available to pay it. The object of Section 25 of the 1941 Act was to enable the trustee, instead of paying the whole of the annuity that he had to pay before, to pay only 20–29ths of it; in other words to pay a proportion which was equivalent to the proportion of each pound that he had of the trust fund after deduction of tax. The Clause which it is proposed to introduce in the Finance Bill this year simply introduces a sliding scale.

6.45 p.m.

At the moment the 1941 Act provides what is to happen when the tax is 10s. in the pound. It obviously would be undesirable to pass an Act


each year according as income increased, so it is proposed to introduce in the Autumn Finance Bill a sliding scale which will bring it about automatically. As tax decreases, so the fraction of the annuity which the trustee has to pay will increase. The result being that when the tax in 9s., the fraction will be 22.29ths, and when it is 8s., it will be 24.29ths, until at some distant day, I hope, if not too distant, the trustee will be under an obligation to pay 29.29ths. The object is simply to introduce new machinery which I do not think really introduces or touches upon any matter of principle. It is simply a matter of legal machinery and nothing else.

Sir P. Hannon: In thanking the hon. and learned Gentleman, may I say that his explanation is equal to that which might have been given by a mathematical master at a public school.

Colonel Stanley: Could we have as clear an explanation of how this affects the question of Surtax? Here we have the case where the Income Tax goes down and Surtax goes up. Have the Government a formula for that as well?

The Solicitor-General: Yes, practically the same formula applies. The Act of 1941 provided that where the trustee had to pay the annuity free not only of tax, but also of Surtax he would have to pay 20.29ths of the amount necessary to pay the annuity free of tax. In addition to that, he had to pay 20.29ths of the amount which had to be paid or which would have had to be paid in order to discharge the amount necessary to pay Surtax at prewar rates. The burden again was transferred from the trust fund to the beneficiary. There again, as tax gets lower, the trustee has pro tanto more of each pound in the trust fund to pay not only Income Tax but Surtax. After paying the Income Tax he has to find a further amount in order to pay Surtax. Before he had to pay 20.29ths and as tax goes down the fraction will go up. [An HON. MEMBER: "Surtax is going up."] The tax will vary either up or down. As Income Tax goes down the payment will necessarily go up because there is an increased amount of each pound after deduction of Income Tax to pay the Surtax whatever it is.

Mr. Pickthorn: I expect that I am missing a point which

ought to be obvious to me. If so, I apologise to you, Mr. Deputy-Speaker, and to the House, but I wonder if the learned Solicitor-General can enlighten me. Is the arithmetical problem at all affected, leaving out the Surtax business, by the amount of income either of the trust, or of the beneficiary? It would seem that there may be beneficiaries, and that there might even be trusts, which would come below the level at which tax is paid at the normal level of 10s. or 9s. in the £ as the case might be. Unless there is an inference, which escaped me, the point was not made clear by the explanation.

The Solicitor-General: I am sorry that I did not make myself clear. Suppose you have a trust fund which has to pay annually, a small annuity which would involve a return of tax, you have to ask what the annuitant was entitled to receive before the war, so as to give him his annuity free of any deduction of taxation. You have to find out what the fund had to pay him, in order to make sure that he got that amount of money without any deduction of tax. Let that amount be x. You find in the hands of the trustee certain money. If the trustee had to pay x at prewar rates and if the rate of tax has gone up, you have again in that case, and in the same way, to apply the same fraction. You apply the fraction which represents the amount of money that he has out of each pound available to pay the annuity reduced by the increase in Income Tax.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

APPOINTED DAY FOR CERTAIN PURPOSES

Sixth Resolution read a Second time.

Motion made, and Question proposed, "That this House does agree with the Committee in the said Resolution."

Colonel Stanley: I want to ask the right hon. Gentleman why it is necessary to have an appointed day dealing particularly with the purpose of Part IV of the Finance Act, 1944. As I read it, this particular reference is to the allowance made in future to money spent upon scientific research, and under the Act referred to no refund will be payable in respect of any expenditure made for the


purposes set out in that Section connected with scientific research if made before the appointed day. This provision was introduced as far back as the Budget of 1944 and I cannot for the life of me understand why it is necessary to fix the appointed day so late. It means that anyone who has some scheme for expenditure on scientific research has every incentive not to push it through as quickly as he can, but to put it off until April, for it is only after April that he will be able to claim the allowances referred to in the Resolution. I cannot understand why it is necessary to have an appointed day and I shall be grateful for an explanation.

Mr. Glenvil Hall: The explanation is that this again is a "slop-over," if I may use the phrase, from the last Budget. This Resolution appeared there and also in the Income Tax Bill and the date was fixed by the then Chancellor of the Exchequer, who is a member of the right hon. and gallant Gentleman's party. [An Hon. Member: "No, he is not."] He sits on that side of the House. As the right hon. and gallant Gentleman very properly said, this writing off of allowances for Income Tax purposes of various kinds is to meet capital expenditure by productive industries, and the legislation was embodied in the enactment mentioned in the Resolution in advance of the end of the war on the full understanding that it would not come into effect until the war was over. It was felt—and in my view quite properly—that industry was entitled to know what it might expect and, therefore, this legislation was passed on the very proper understanding that it would not be possible, as it was a contribution towards modernisation and new equipment, to put this into effect until after the war. That being so the allowances should not become available and payable until then. The war with Germany finished last May and the war with Japan some time later in the year, and that being so the obvious date from which these allowances should begin to run is 6th April next, and that is the date which has been fixed in the Resolution.

Viscount Hinchingbrooke: I think that this is a very unsatisfactory reply indeed. As the right hon. Gentleman has pointed out, firms now will be wanting to decide upon expenditure on scientific research

from this day onwards. They will be considering building and equipment and new processes and are they not to be allowed to set off against Income Tax any of this expenditure? I did not understand from the right hon. Gentleman's explanation why the Government have not appointed a day already. It was considered in the Finance Act of this summer and, surely, it would have been possible to fix a day, say, 1st September or the 1st of this month, from which such expenditure would be allowed. It is altogether an unsatisfactory reply and I think that the right hon. Gentleman can expect those of us suffering on this side of the House to take some action in the matter.

Mr. Dalton: Perhaps it will save time if I give an undertaking to look into it. It is a matter which, as my hon. Friend properly said, we have taken over from my distinguished predecessor, who I am told is not a member of the Conservative Party but who remains my distinguished predecessor none the less, and this was his idea. As to the timing, I will undertake to look into it and see whether there are any difficulties, as there may well be, in advancing the date.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

INCOME TAX ON EXCESS PROFIT TAX REFUNDS

Seventh Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. Benson: If I understand this Resolution aright an anomaly is likely to arise under it. Under this Resolution all sums which are to be refunded under E.P.T. are to be treated as income for all purposes of the Income Tax Acts. That means that these sums will, in the case of private individuals and partnerships, be assessable to Surtax. In the case of limited companies, these sums have been collected for a period of six or seven years, but if they are to be paid in one year, they will aggregate for Surtax purposes, and will bear a very much higher rate of tax than they would have done had Surtax been at 90 per cent. and the final 10 per cent. had been retained in the hands of the firm or individual. As these refunds are primarily for the purpose


of re-equipment, it seems that there is a great deal of inequality in taking income for six years and then aggregating it for taxation purposes; also it is rather defeating the purposes of the fund in using it for Income Tax purposes instead of for the purposes of equipment.

Sir W. Wakefield: I would like to support what the hon. Member for Chesterfield (Mr. Benson) has said and I hope that the Chancellor will extend these repayments for Surtax purposes over the same period of years as they would have been it paid at the time. There is a point I want to raise and I hope that the Chancellor will be able to make it clear. It may be that I ought to understand it, but I do not. Is the Income Tax which is to be charged on the sums repaid to be at 9s. in the £, or at10s. in the £ at which it was when the E.P.T. profit was earned? It would be helpful if the House could be informed what is intended on that point and I should be grateful if the Chancellor could give an answer.

6.30 p.m.

Mr. Marlowe: I want to reinforce the observations of the hon. Member for Chesterfield (Mr. Benson) and of my hon. Friend the Member for St. Marylebone (Sir W. Wakefield) that this may result in very considerable injustice to the taxpayer. He might be liable, taking Income Tax and Surtax together, to pay 15s. in the £ and it rather looks as though there will be a large sum of money which will remove him into an entirely different category of taxpayer. By the Chancellor's action, and not by any action of his own, he may have his tax put up from 15s. to 19s. 6d. I ask the Chancellor to reconsider this matter, and to allow the taxpayer, if he elects to do so, to spread the repayment over a six-year period, or the equivalent period over which he has paid the tax concerned. The Chancellor has not told us anything, so far, about the basis of charging tax on these sums at all, and I would like him to justify that basis. It seems to me that there is no real ground for what is really a capital levy being taxed as income in this way. The same principle is observed in the payment of post-war credits. They, as I understand it, are now to be subject to Income Tax although they represent money taken from the taxpayer compulsorily during the war. When repayment is made, the taxpayers receive only half

of what is due to them. The same principle is implied here, and I would ask the Chancellor to justify it, if he can. It was said many times in the Debate the other day, that there are instances when the Chancellor gives with his right hand and takes away with his left. I do not believe the Chancellor has a right hand at all. He appears to me to have two left hands, but I would like him to justify this proposal if he can.

The Solicitor-General: I would like to deal first with the point about the repayment of the Excess Profits Tax. The Act of 1941 specifically provides that payments of Excess Profits Tax are to be allowed as deductions, in arriving at the annual profits of the firm on which it is assessed to that, naturally, they must come in as trading receipts. The Chancellor of the day did, in point of fact, use these words:
The amount of the 20 per cent. Excess Profits Tax repaid, will, of course, be fully treated as a trading receipt, and thus come under the charge for Income Tax, so that the tax available to industry on this concession will be the 20 per cent. less whatever Income Tax is due.
I think that meets that particular point.
Then there is the point made by an hon. Member on the question of Surtax. My right hon. Friend is very conscious of a possible injustice and also the effect it might have on trade by rendering a trader suddenly liable to a large Surtax payment. In order to avoid that the tax payer will have the following option. He will be entitled, if he wishes, to have the repayment spread over six years during which it was collected so that it may come into his yearly accounts for those six years as a trading receipt. That will, I submit, avoid any injustice on that score. Then the question was asked as to what—

Mr. Jennings: Do you mean for the sixth year?

The Solicitor-General: Yes. Then the point was raised as to the rate at which it would be assessed for tax. As to that, I have to state that the tax will be deducted at source. The repayments will take some time to effect, and the bulk of them will be made during the 1946–47 accounting period. It would, it is thought, be unfair to treat them in that period as income on which tax is deducted at source, where the amount received, if it


fell to be taxed in the succeeding year, that is to say, 1947–48, would benefit by a reduction of tax. Therefore, my right hon. Friend offers these two options to the taxpayer; either he can have the amount spread over the six years which preceded the option I referred to a moment ago, or he can, if it serves his interest better, when he receives the money, even though he receives it in the year 1946–47 with tax deducted at source, treat it as a trading receipt taxable for the ensuing year. There will be a cross-account so as to compensate him for any reduction of tax which would be available to him during the succeeding year. Of course, it would not apply to a trader who would not be liable to tax in respect of the year 1947–48. For example, a trader who was not trading, who had gone out of business, or something of that sort, would not have the option. The two options would be there and, therefore, there would be no injustice upon the taxpayer in that he would not be liable to Surtax unfairly nor deprived of any advantage he might have in respect of the provision.

Colonel Stanley: When the hon. and learned Gentleman talks about the Chancellor giving the taxpayer an option does he mean they will be statutory options?

The Solicitor-General: Certainly.

Colonel Stanley: At what stage will the election be made?

The Solicitor-General: It is difficult to say. The taxpayer will be given the opportunity of saying which he would prefer. It will be made clear to him what is the option, and he will be asked which course he prefers. But he will receive the money, in the first place, after suffering a reduction of tax at source, so it will be a question of accounting after payment has been received by the Exchequer, and there would, presumably, be a repayment to the taxpayer, but it depends on the circumstances.

Mr. I. J. Pitman: Might I ask one question? In Section 11 are the words "at whatever date." Is there no limit during the stage when we can go back to 1946–47?

The Solicitor-General: If I understand the hon. Gentleman correctly, his question is: "Is there to be no limit to the time when the payment is to be assessed and made"?

Mr. Pitman: "At whatever date."

The Solicitor-General: The answer is that the assessment of 100 per cent. E.P.T. liability is a process which must necessarily take a considerable time. I think the only answer I can give is that it is being done as soon as possible. It is a difficult thing to do, and the assessment has to cover a period right up to date. In the event of its having to take some considerable time, where the affairs of any particular undertaking are such that the ascertaining of the figures required take months or years, particularly in the case of a concern which has not been run quite honestly, the assessment of the E.P.T. liability, and the ascertainment of the amount of refund to the taxpayer, may take a long time.

Mr. Pitman: Is there no seventh year limitation, or no time limit?

The Solicitor-General: A limitation will be brought about in the natural course of events, that is to say, it cannot take more than a certain number of years to assess E.P.T. liability. Naturally, the revenue authorities want to get their hands on what is due to them at the earliest possible moment, so it is in the interest of those authorities to get the thing cleared up as soon as possible. The provision is merely to allow time to ascertain the exact circumstances. It may take some considerable time, but it will be done as soon as possible.

Mr. Pitman: Is it not possible to define "some considerable time"?

The Solicitor-General: I am afraid, from the very nature of the problems with which the assessing authorities are concerned, it is utterly impossible. It is much easier in the case of a concern whose affairs are conducted honestly. It is a matter of the computation of figures. Even then, in certain cases, contingent liabilities and contingent values have to be assessed which sometimes are difficult to assess at their proper figures. In the case of firms whose transactions are not recorded in their books, or who may have resorted to some sort of subterfuge to avoid E.P.T. liabilities, it is bound to take some considerable time, as all cases do not involve an exact computation of figures from books properly kept.

Mr. Callaghan: May I ask a question?

Mr. Deputy-Speaker: This is not a cross-examination. We are not in a Committee stage; these are speeches which are being made now.

Mr. Callaghan: May I say there are some wider aspects of this problem than the one my hon. and learned Friend has made. This is not only a question of dealing with firms of dubious honesty. Is there no risk of a sheer physical difficulty in determining E.P.T. liability as long as you have so many points of principle to settle? There are also questions of fact. For example, this issue of deferred repairs. Many hon. Members will know about the shortage of materials which means that, at the moment, it is impossible for a firm to put repairs into effect. The consequence is that the Revenue authorities cannot assess the amount of E.P.T., and, if the shortage of materials continues, it may well be a matter of years before repairs are put into effect, and the exact liability can be determined. In those circumstances, I suggest that this is a very wise precaution.

Mr. Pitman: May I make my point? While I quite agree that the Revenue, on their side, should have the opportunity to take up things like repairs, there is also the aspect that the taxpayer needs some provision against the unnecessary spinning-out of procedure, so that he does not get taxed for years and years. Are we really having to live all these years with this thing hanging over the heads of the taxpayer?

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Eighth Resolution agreed to.

RELIEF FROM DOUBLE TAXATION

Ninth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Captain Crookshank: I do not know whether this would be the appropriate occasion for the Chancellor to say something about other negotiations which may have taken place, apart from those with the United States, of which the House has had full information, and whether, if they have taken place, or are expected to take place, they will be on the same lines; or, again, whether the Chancellor anticipates

that a different treatment will be adopted, as between other countries, from that followed in the case of the United States.

Mr. Dalton: I am glad to respond to the right hon. and gallant Gentleman's question. There is not much I can say further than that we are now engaged in negotiations, notably with several of the Dominion Governments. These negotiations are being conducted with good will on both sides. They are complicated, and I would prefer the House to be informed of them when they reach conclusion. I do not think I could usefully say more than that at this stage, but we will keep the House fully informed, and I am sure that the more of these agreements we can conclude the better it will be for our trading prospects.

6.45 p.m.

Mr. Walter Fletcher: This Resolution obviously has two great merits—the quality of mercy, in that it blesses him that gives and him that takes, and also the merit of continuity. We have heard this afternoon some of the rather more doubtful Resolutions. This admirable Resolution obviously springs from the right hon. Gentleman, and I have no doubt that the Chancellor will admit the fairness of it.

Mr. Dalton: Yes, certainly.

Mr. Fletcher: It is of very much greater importance than may be realised. It is perfectly clear that we are living in a closed economy, and that not for many years will the tariff walls be broken down as easily as is imagined. Looking at this Resolution, not only from the point of view of the relief to the shareholder, but from the more important one of the indication of assistance to themanufacturer and to our export trade. I think it will the realised that we should have as many of these Agreements as possible. They will assist our unfavourable export trade almost more than anything else. Imagination is the pilot of enterprise, and, with a little imagination, we can see the great effect on our exports. Our experience of these Agreements with America has shown us how reciprocally good they are.
There is, however, one point attaching to this blessing which I am now giving to this Resolution, and that concerns the need for great precision in making such Agreements and also of arriving, as far as possible, at a standardised form. We


have heard a good deal today on the subject of motor cars and on the merits and demerits of producing as few models as possible. I know the difficulties which there will be in negotiations with other countries, but, if we can arrive at a standardised form, it will be of great assistance to industry. Where an industry is contemplating opening a subsidiary in any other part of the world, one of the first things it must do is to compute what the taxation will be, and, if we can get an assurance from the Chancellor that he will bear in mind the need for simplifying and standardising these Agreements with other countries, it will be of the greatest assistance.

Mr. Boothby: I was disappointed that the Chancellor made no reference to the countries of Western Europe now in the sterling area. Some of us on this side of the House feel that we are not getting on very fast with any kind of comprehensive trading or financial agreements with them. We have one currency Agreement so far, and I think it would be a great satisfaction to the House if the Chancellor said that, in principle, the Government are in favour of applying these Agreements to those countries.

Mr. Dalton: Certainly.

Mr. Eccles: May I ask the Chancellor whether the rules which I understand the Government are going to make about the way in which people can dispose of this relief, will come out in time for this financial year? It is already the end of October, and a company with a big branch business in the United States, whose financial year corresponds with the calendar year, will want to know how it can dispose of the relief which it is to get. I think the Chancellor will agree that disposal of Dominion relief to the shareholder is not very satisfactory. We want this relief to encourage enterprise, and it would be best if rules could be made so that the preference shareholders do not participate in it. Can the right hon. Gentleman give industry any assurance that these rules will come out before the end of this year?

The Solicitor-General: The hon. Member for Bury (Mr. W. Fletcher) called attention to the urgent necessity for some kind of uniformity, and I can assure the House that one of the objects of the Resolution

is to enable conditions to be inserted in the Bill which shall do something in the way of bringing about that uniformity, and I think that will also meet the point made by the last speaker with regard to the rules, so that industrialists shall know where they stand. At the moment the legislation in this country is rather of a piecemeal nature. One of the Sections deals with reciprocal relief so far as the Dominions are concerned, and includes India. There is also one provision which deals solely with shipping, another which deals solely with air transport, and another which regulates the position in the case of companies trading through agents and branches. The net result of it is that there is only a piecemeal attempt to introduce into the British legislative system anything in the nature of a comprehensive scheme for bringing about, or enabling the Government to put into operation, agreements in common form with countries throughout the world, and one of the primary objects of this Resolution is to enable the Bill to include something of that nature, so that, as and when agreements are negotiated, as far as possible, they will be in standard form, because the common object aimed at is to enable the Government to give effect to these agreements, as far as possible, on a uniform system.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Tenth Resolution agreed to.

EXTENSION OF TIME FOR MAKING ASSESSMENTS IN CERTAIN CASES

Eleventh Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Captain Crookshank: I hope we can have some idea from the Government of what they have in mind here about the extent of time. How long?

Mr. Marlowe: I would like to ask a question about this. It appears to accept the principle of opening matters which are already settled, and I have always understood that that is not a principle which commended itself to the Treasury. I remember having some correspondence with the Treasury some months ago on


an analogous matter, and the way they defeated me on my point was that they said it would result in opening up settled accounts. I thought it was rather a good point, and I gave way and did not continue the argument. This now appears to be the very opposite case, and it appears that, as usual with the Treasury, they win either way. I would like an explanation of what principle is involved here.

The Solicitor-General: The Bill proposes to introduce machinery to enable persons to apply for adjustments of E.P.T. and National Defence Contribution liability without limit of time. In as much as anything which is repaid to them in respect of their liability will fall to come into their accounts as a trading receipt, the Treasury would be a loser if there were not also powers enabling them to reconsider the Income Tax assessments as and when those receipts come into the accounts of the trader. No doubt the House is aware that, at the present time, the limit is six years, and, in the case of estates of deceased persons, three years. It is proposed to extend that period to be co-terminus with the period which may elapse while operations for adjustment of E.P.T. and National Defence Contribution liability can be entertained, so that the answer which the Government make is that it is intended, with regard to Excess Profits Tax liability and National Defence Contribution liability, to extend the time, at any rate for the moment, without limit, during which taxpayers can apply to readjust their liability in respect of these two taxes. That also involves, as a matter of necessary logic, that there should be an equal extension with regard to the adjustment of Income Tax consequential on the adjustment of E.P.T. and National Defence Contribution liability. In other words, there is no limit to the time which is proposed for these applications.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Twelfth Resolution agreed to.

EXCESS PROFITS TAX

Thirteenth Resolution read a Second time.

Motion made, and Question proposed, "That this House does agree with the Committee in the said Resolution."

Sir Hugh Lucas-Tooth: I am afraid I shall detain the House rather longer than other speakers have done, but, having waited for 17 years since I last addressed the House, I think, perhaps, I may be excused for trespassing longer on its time. If I cannot, in such circumstances, ask for the indulgence which is accorded to a maiden speech, perhaps I can ask for that degree of toleration which I think the House would be willing to accord to a such a Rip Van Winkle as myself.
The Resolution now before the House is from the immediate point of view much the most important part of this Budget. Other aspects may be more important in the long run, but the immediate effect of the proposed changes in E.P.T. take pride of place, at any rate so far as industry is concerned. Everyone will agree with the Chancellor in wishing to be rid of this tax. It is the greatest dead weight on efficiency which industry has to bear. It is a tax which has always been full of unfairness and anomalies, and which grows worse as it grows older. Everyone will rejoice if it has become odious to the present Government, and certainly no one is going to object to its being cut by 20 per cent. I hardly think that the Chancellor expects to be congratulated on this decision. The absolute necessity for such minimum action has become universally apparent. In this connection, however, I should like to ask the Chancellor why the Resolution before the House contains no direct reference to the proposed reduction. No doubt there is some technical explanation, but, before the House passes the Resolution, which will presumably govern the scope of the discussion on the Finance Bill when it comes on later, I would like to know whether it sets any limit upon subsequent discussions regarding abolition or reduction of the tax.

7.0 p.m.

When I come to look at the specific proposals of the Chancellor regarding Excess Profits Tax, it seems to me that there is a good deal which has been omitted, and some things to be included, which will have to be considered very carefully before we raise a cheer for the right hon. Gentleman as the saviour of British industry. In the first place it is proposed that deficiency payments shall cease absolutely after December, 1946. I have studied this Resolution, the White


Paper and reports of the speeches of the Chancellor of the Exchequer and the Financial Secretary in this connection, and I still find myself in complete doubt as to what is actually proposed. The Resolution is in perfectly general terms. The White Paper says:
It is proposed that deficiencies as from the 1st January, 1947, will not rank for set-off against excess profits for other periods.

Nowhere can I find any definition of "deficiency." There does not appear to be any qualification or limitation of the term "deficiency." Does that mean that any deficiency whatsoever which first appears in the balance sheet of a business after December, 1946, will be completely ruled out for ranking as set-off against payments of Excess Profits Tax previously made? If this is the intention, I submit that it will not only be unfair, but a very serious breach of public faith.

The whole scheme of E.P.T. has been to treat the period of the emergency as a whole; it is not properly an annual tax at all which can be varied at will from year to year. It is rather a scheme of attempting to ration profits over a whole abnormal period. If this is so we cannot in fairness just shut down on the scheme when it suits us to do so for purely financial purposes. We cannot say to the business concerns affected, "You threw all your resources into wartime production and we appreciate that for that very reason you are now left with an expensive period of reconstruction, but the war is over, so why should we care?" That seems to be the attitude which we should be adopting if the word "deficiency" is not to be qualified. We should be saying to these businesses, "You can go and stew in your own juice"—or rather "You can go and stew without any juice, because we have seen to it that all the available juice has been drained off." I do not believe that that is the attitude of the Government to these concerns. Many of them are concerns of small enterprising men who put everything into getting the greatest possible output during the war without the slightest prospect of any financial advantage to themselves. They were relying on the clear promise inherent in this scheme that their wartime surplus would be available to cover them against the losses which were bound to follow their wartime activities. I am not now speaking of the 20 per cent. refund; that

was to be repayable in any event for what may be called industrial rehabilitation.

My point is that the essence of this scheme was that industry was given to understand that it could shape its plan to cover the whole period of war production, including the terminal period. Many concerns drastically altered the course of their production for war purposes, knowing that such alteration would require heavy expenditure and loss before they could reconvert for peace time production purposes—often much more than their 20 per cent. refund. It seems to me to be indefensible that we should suddenly bring down a guillotine upon the emergency period, whether or not the E.P.T. system is to be continued generally after 1946. I am not suggesting that E.P.T. should be kept on indefinitely; indeed, I would like to see it abolished right away now. I am merely asking the Chancellor that he should give special consideration to a special class of deficiency. Common fairness requires that deficiencies which can be proved to be due to the war period, at whatever date they actually appear in the balance sheets of the firms concerned, must be capable of being set off against those surpluses which were wholly taken away in respect of that period. I hope the Chancellor will be able to give some indication of the Government's intentions in this respect this evening. It is certainly a matter of urgency that industries should know how they stand in this matter. Will he reassure the House and the country that deficiencies which are genuinely attributable to war service—if I may adopt the phrase from another context—are not to be ruled out by his proposals?

I would like to say a word on another aspect—the 20 per cent. refund. Here, again, there is a great deal of disquiet in many quarters, and very little comfort is to be found from an examination of the Government's statement on this subject. I represent a North London constituency in which there are many people concerned in small industrial undertakings, particularly engineering undertakings. Often these small businesses have been built up by the skill and initiative of one or two men who have sunk practically all their capital in the business. During the war the greatest possible pressure was exerted upon these concerns by Government Departments to increase their output. They responded fully and gener


ously—particularly generously, because, owing to the incidence of the 100 per cent. E.P.T., they could not stand to derive a halfpenny worth of benefit out of their efforts.

In order to meet demands which were made upon them it was essential to have the use of increased capital. They could not plough back into their businesses any substantial proportion of the profits which they were making, because practically the whole of those profits were being taken in taxation. I believe that E.P.T., the National Defence Contribution and the War Damage Contribution together took away over 90 per cent. of the total profits of this class of industry. Far and away the largest part of that was in respect of E.P.T. But the tax is not payable until the year after the year in respect of which it is assessed, and so many firms found themselves in the position of having substantial cash assets represented by unpaid E.P.T. The result was inevitable. Under pressure, that unpaid E.P.T. was used for the purposes of expansion. I do not say that that was sound or wise, but at any rate it enabled the country to get the production which it so urgently needed. I think it is impossible to say that there was anything ethically wrong in what these people did. So long as wartime conditions existed, gross profits continued high, and so there was usually cash available to keep the Inland Revenue wolf from the door or, if not from the door, at any rate from the larder. Now that profits are allowed to drop heavily there will be no liquid resources available to help them meet last year's E.P.T.

The House will understand that the money which should be available to pay this tax has not been squandered, that it has not been spent by the owners of these concerns upon themselves. It is merely represented by assets which are available not in liquid form, but in the shape of stock, tools and the like. If the present law were strictly enforced the inevitable result would be wholesale liquidation of many of these firms. This would be a disaster not only for them, but for the country as a whole. In this connection I have two questions which I would like to ask the Chancellor. The first is whether he will consider some special arrangement so as to ensure that when a concern is in arrears in respect of E.P.T., in the circumstances I have described, it will be

allowed some definite period to enable it to meet its obligations without embarrassment. Could he say that they might perhaps be allowed five years—perhaps paying interest at some reasonable rate over that period—in order to find the money which they are willing to pay, and certainly ultimately will be able to find?
The second question is more directly concerned with the actual proposals of this Budget. Will the Chancellor ensure that any instructions or conditions for the refund of the 20 per cent. will enable such refund to be made as a set off against unpaid arrears of E.P.T.? I do not think there should be any such compulsory set off, but there is the possibility that payment of those arrears would not be regarded as coming under conditions within the meaning of those that he might issue. At any rate, there should be an option given to concerns that are affected in this way to use their arrears for this very proper purpose if they choose to do so. If the Chancellor can say something about this I think it would go far to alleviate the very great fears of a large and deserving section of the community, and would certainly enable many small concerns to get going with their plans for peacetime production.

7.15 p.m.

Sir P. Hannon: I would like forcibly to endorse the practical and constructive speech which has just been made by my hon. and gallant Friend the Member for South Hendon (Sir H. Lucas-Tooth). I am sure that the Chancellor himself has realised by now that to fix the end of 1946 as the date for the completion of all deficiencies that will arise in relation to resettlement of a refund of E.P.T. is to fix an impossible date from a practical point of view. Small manufacturers, particularly, will be put into a very difficult situation. Although I do not think he was in the House at the time, I am sure the Chancellor will remember what happened after the last war. Firms were placed in the same difficult position in the winding up of their affairs following the close of that conflict. It was not a question of adjusting their difficulties and arranging with the Inland Revenue for the discharge of their obligations in the course of one year; the matter extended over three or four years.
The Chancellor indicated in his Budget speech—which I, who have a great per


sonal regard for him, appreciated very much—that he had no love for E.P.T. He made an admirable propagandist speech. Two million taxpayers, he said, were to be relieved next year from tax. He further said that E.P.T. ought to be wiped out at the earliest possible moment from our whole system ofpublic finance. Curiously enough, he made no reference to what happened in America where, after the defeat of Japan, E.P.T. was wiped out from the industrial organisation of that country. Why did not the right hon. Gentleman, coming fresh to his great responsibility as director of the finances of this country, take his courage in his hands and do for Britain what the Chairman of the Finance Committee of the United States Senate did for America? Anyhow, he has not done it, and we have to wait until his next Budget to see in what respect he can modify the incidence of this tax. I want to put a question to the right hon. Gentleman. Where the reduction of 60 per cent. comes into operation, and deficiencies have to be adjusted for the preceding year, will the full allowance of 100 per cent. contribution be made instead of the adjustment being made on the 60 per cent. basis? I think we ought to have a clear assurance on that point for the benefit of industry.
We ought to know a little more about the limitations imposed by the Chancellor on the application of the refund to the purposes of industry. Of course, if the right hon. Gentleman says that the refund applies only to putting machinery back, and to refurbishing old plant, then that is a limitation which ought to be helpful to industry as a matter of cold, hard fact. Most industries, during the last 12 or 18 months, have had under constant consideration their post war reconstruction plans. Much work has been put into the organisation of research and the extension of productive capacity for peace purposes. They must be free on a much wider basis to apply the refund to which they become entitled under the arrangements made by this Resolution to the exploitation of markets, the development of business, and the encouragement of research, all of which must be done if our industries are to assert their competitive power in the world. I suggest that the Chancellor should take a more generous view of the extent to which the refund will be employed in the rehabilitation of industry.

I would like the Chancellor of the Exchequer to realise that there are a great many firms which, following upon the war, will need fresh capital. Will the Chancellor allow the refund to be employed for capital purposes in the development of business enterprise, when it comes back to a particular firm? When one looks over the whole field of industry—[Interruption.] I am not consulting the interests of the hon. Member for West Fife (Mr. Gallacher); he has views all his own, on all these financial questions. Some £250,000,000 has come out of industry. Will the Chancellor tell the House that he will refund this money, spread over the whole of industry, so that it can be employed on a wider field of research, market exploitation and agencies abroad, and not merely confine it to the refurbishing and conditioning of necessary machinery. We have to face very acute competition in the near future from the United States. Controls were taken away there immediately the war was over. Two hundred were removed almost at once.

Mr. Gallacher: What a happy land.

Sir P. Hannon: I could sometimes wish that the hon. Gentleman were added to the happiness of that land. In America, during the war, the productive capacity of the country has been increased twenty-fold, and we have to compete against that in world markets. We have to face a vast organisation created by America during the war. I am sure that the Chancellor sees, from time to time, reports from Congress of the immense work which is in progress to convert munition production to peace production. Those of us who are concerned with the progress of industry in this country are a little staggered by the vast amount of effort made in the United States to collar the markets of the world. If rumour is to be trusted, something is being done in the United States which may embarrass enterprise in our Dominions and in our own country.
I do not want to press the Chancellor of the Exchequer too hard. He has a difficult row to hoe, and great responsibilities, but so long as taxation in this country stands at its present level—and even with the reduction of one shilling—our power to compete in the world markets against the United States will be very largely frustrated. We know that in the great Midland areas, numbers of small firms are looking to the Chancellor to make


such concessions as he can, and to arrange, in his next Budget, relief, particularly for these small firms, so that the taxation falling upon them may be as little as possible, and that they may be enabled to compete and hold their place in the markets of the world. In Birmingham, we are manacled by controls.

Mr. Deputy-Speaker (Mr. Hubert Beaumont): We are dealing with Excess Profits Tax and not controls.

Sir P. Hannon: Excess Profits Tax is intimately related with this question of controls, and I could not help bringing them in. I am grateful to the Chancellor of the Exchequer for the concessions which he has made, but I hope that his conduct will improve in the future. I know that his sympathy is with the progress of industry, and I know the affection which he entertains for private enterprise. On all these grounds, I hope that we shall have, in the Budget next year, a fresh outlook, and that, surrounded as he is by people of experience in the Treasury and other Departments, and with the advice of the President of the Board of Trade, he will introduce a new ray of hope.

Mr. Jennings: I feel that I cannot let this point pass with regard to the closing-down of rebates for Excess Profits Tax. We have in our large cities, particularly in places like Sheffield, numbers of small engineering works which have reconditioned their plant solely for the purposes of war production. They have had 100 per cent. E.P.T. taken from them, and they are now being told that the Government are going to shut down on repayment of E.P.T. on 31st December, 1946. In other words, the Government have taken from them 100 per cent. of their profits during the active war years, and are now giving them 12 months in which to put their house in order. I agree with the Chancellor of the Exchequer that he must fix a date, and not give too long for these repayments, because I remember, after the last war, the period was extended, and E.P.T. became an acute liability on the then Chancellor of the Exchequer. But I feel that he is shutting down too quickly now. I would point out—and this concerns every Member of every party in this House—that he may cause unemployment by shutting down and not allowing people to reclaim after a year, because they cannot bring their

businesses up to date within that time, in order to compete in the export market.
I appeal to the right hon. Gentleman to give a last moment's thought to this, and extend that period at least for another year, if not for two, and I should like to see it three. I think that even two years would give these people a much better opportunity of putting their house in order. Twelve months is far too short. I know his difficulty, but in the interests of all small engineering businesses, which have contributed a great deal to the war effort, I would ask him to bear in mind particularly places like Sheffield, where there are dozens of these small businesses. He should extend the period and give them an opportunity of getting back a second year's rebate. I make a special appeal to the Chancellor not to make this period too short, otherwise he may ruin many of these businesses.

7.30 p.m.

The Solicitor-General: May I respectfully agree with what was said by the hon. Member for Hallam (Mr. Jennings) that the Government, at some time or other, have to put a term on these payments. It is not as if one could afford to be generous. One has to be strictly practical, and having regard to the other concessions in connection with Excess Profits Tax, amounts and repayments, I respectfully impress upon the House the view that the traders referred to by hon. Members opposite have not been too badly done by. I should join willingly in what they say about the excellent work done by the traders who uncomplainingly submitted to the tax. I would not like to derogate from the extremely useful and valuable service they performed throughout the war period. All credit to them, and all credit to everyone else who made sacrifices in this way, or in life and limb. At some time or other one has to take the problem practically in one's hands, and say, "Here must be the stop. Here must be the guillotine."
I submit that the point at which the guillotine has been applied in this case is far from an unreasonable one. It ought to allow those concerned enough time to get on their feet sufficiently to meet the post war period, it being conceded that that is a problem which will affect every single citizen in this Empire—it will present him with difficulties and require strenuous effort on his part. The hon. Member for Moseley (Sir P. Hannon) was anxious lest


the Chancellor's rules should, in some way, interfere with the ploughing back into industry of the Excess Profits Tax repayments. I can assure him, on the authority of my right hon. Friend, that the whole object of the rules which he proposes to introduce are precisely to ensure that the repayments are, in fact, ploughed back into industry, and in the most advantageous form in which that can be done. The object is to prevent their being distributed unnecessarily in dividends. The whole point is to see that these repayments are sensibly used when they come into the hands of the traders to whom they are due.
The hon. and gallant Member for South Hendon (Sir H. Lucas-Tooth) was anxious whether the repayments could be set off against arrears of Excess Profits Tax. That, I take it, is a matter for negotiation between the trader and the Treasury. I am sure that hon. Members will agree that in one's Income Tax or Surtax dealings one always finds them extremely reasonable when a case is fairly and squarely put to them. I, for one, do not apprehend that any trader will find any difficulty in coming to a satisfactory arrangement over the appropriate set-offs if he finds himself in a difficulty which can be alleviated by using Excess Profits Tax repayments for that purpose.

Mr. Jennings: May I take it that undue pressure will not be brought to bear for arrears of Excess Profits Tax, in the sort of case illustrated by my hon. Friend the Member for Moseley (Sir P. Hannon), when lack of liquidity has been brought about by the development of the business?

The Solicitor-General: That question rather assumes the premise that undue influence is, in fact, generally brought to bear. I am sorry to be so legalistic.

Mr. Jack Jones: Will proof of inability to pay have to be produced at the same time?

The Solicitor-General: I would recommend traders to address themselves to the good sense of the persons whose responsibility it is to collect the tax, and to contribute their share of good sense.

Sir P. Hannon: Can the refund be employed where a shortage of capital in a

business prevents that business from expanding?

The Solicitor-General: They must not expend the money in dividends, they must put it back in the business, that is the answer to the question. The whole object is to see that the businesses are again got on their feet. I commend the Resolution to the House, and ask them to say that it is a Resolution which should be acceded to.

Sir Frank Sanderson: With the experience of the last war in mind, it is generally accepted that there should be a reasonable time limit in respect of the period to which Excess Profits Tax repayment should run. There is one point which I do not think has been raised at all in this Debate, and which I regard with great concern. It is this: The right hon. Gentleman has fixed the final date upon which Excess Profits Tax will be recoverable, namely, 31st December of next year. He will be aware that a considerable number and variety of commodities are still controlled by the Government both in regard to quantity and the price at which those commodities are and will continue to be handed over to the manufacturer. My concern is that it may well be, when we arrive at the end of the financial year ending 31st December next, that companies may have a quantity of raw materials which have been supplied to them by Government Departments, the price of which commodities is fixed by the Government. Should the Government determine to release the control upon those commodities, let us say in the closing months of next year, it would then mean manufacturers would find themselves in the following position. They would have a quantity of raw materials supplied to them, let us say, by the Food Controller or the Controller of Oils and Fats, at a fixed price. They may well find, indeed, with my experience, I will go so far as to say that they will inevitably find that during the first half of 1947, when the controls over these raw materials to which I have referred may have been removed, the company will be faced with the difference between the price at which they have purchased the raw materials from the Government Department and the prevailing price of the day ultimately realised by the manufacturer.


I ask the right hon. Gentleman if he will consider—and this is a point of substance about which many of us are gravely concerned—whether he can find any means of elasticity whereby the Excess Profits Tax could be offset against the stocks of commodities which were carried over from the end of next year, until these particular commodities have been consumed by the manufacturer. Unless we have that assurance, the position will be that manufacturers in many industries of great national importance which I could name to the right hon. Gentleman—I do not wish to burden the House with the details—will have gradually to reduce their output so that they can be assured that on 31st December next they are more or less free of their stock. That would be to the detriment of the country as a whole, and since the prices of those commodities to which I refer are fixed by the Government, at would surely be grossly unfair that merely in the process of conducting their business these manufacturers would inevitably be faced with a loss over which they have no power or control, and which they have no means of preventing other than by closing down their mills and using up those stocks before the Excess Profits Tax repayment comes to an end. I would seek to prevail upon the right hon. Gentleman, if he is unable to say anything in this regard now, to promise to give it the attention which it merits.

Sir W. Wakefield: The country will hear with concern the statement by the Solicitor-General that reconsideration is not to be given to the extension of these deficiency payments. On this side very reasonable and powerful speeches, supported with facts, have been delivered to point out the harm that will be done to the country, in particular from the point of view of employment, by giving such a short term for these deficiency payments. We all agree that after the last war the period was too long, and that such things as sales at which deficiencies, which existed because of past E.P.T., were used up, and that sort of thing which is not to the general public advantage, ought to be stopped.
What does concern us very much is that this deficiency shortage will mean unemployment when employment is needed. Hon. Members opposite are

committed to a programme of full employment. We know that during the next year or so there will be a shortage of goods and plenty of employment, but the time when employment will be wanted will be in two, three or four years' time, and it will be possible to give full employment only if industry at that time is sufficiently equipped, particularly the small firms which have not great financial resources. In the event of a fire a wise firm has a loss of profit insurance policy. I suggest that this question of deficiency payments should be looked at in this light. Small firms have to re-equip themselves. They have to turn from war to peace production, but for a year or two they may have to work with obsolete equipment. Anybody in industry knows that deliveries cannot begin for perhaps two years. Machines have to go abroad for our export trade. If these firms are to re-equip themselves in 1946 the benefit of the turnover to these new machines and so on will not be felt until 1947 or 1948. There will be a time, perhaps in 1947, when deficiency payments will no longer be available and when they will be really needed. If these deficiency payments are not extended for another year, there may be real unemployment which could have been avoided at that time in 1947 or roundabout then, when we shall find the present shortage of the goods most urgently needed will be overcome.
There is one point which cannot be emphasised too often, and that is with regard to the position in the United States of America and Canada. There they have much more generous allowances for writing off machinery than have existed in this country. The machinery is newer, more up to date and more efficient. If we have to compete with products from America and Canada our industries, and particularly our small ones, must be equipped with the most up-to-date machines. It is only by having some cash resources which would be made available from these deficiency payments that the small industries can be so equipped in order to develop our export trade which, as the right hon. Gentleman knows, we must do, and by which we can only provide that full employment which we on this side are just as desirous of seeing achieved as hon. Members opposite.

7.45 p.m.

I hope the Chancellor of the Exchequer will reconsider this matter. If he likes, he can make it 31st December, 1946, but let him make some provision for the industries which can show good cause why they have been delayed in turning over, such as not having had the machines and so on, and let him provide some opportunity for really genuine cases so that they may put forward their position for consideration. I hope this point will be reconsidered. It is of importance to the common man. We on this side have to find work for thousands of people. It has been our duty to do it, and we want to ensure that conditions are created by the Government, whether it is a party different from ours or not, so that the common man may have a higher standard of living. It is for that reason, and for no other, that we are bringing forward these suggestions. We want to see full employment and good wages, and we are putting forward constructive suggestions in order to assist the policies in which we believe, just as the Chancellor and hon. Members opposite also believe in them.

Colonel Stanley: I desire to reinforce the appeal made by my hon. Friend. This is a very important point which we all regard without any party feeling at all. The hon. and learned Gentleman the Solicitor-General put the matter in a nutshell. He said that what we all want to do is to give these people enough time to get on their feet, and the sole question is whether a year is enough time to enable all of them to get on their feet. It would be unfair to fix a time so that some fortunate people, because of their location and the supply of labour and material in their neighbourhood, might get through, whereas others differently placed could not. If it were a question of the managers of these industries being able, as they were in peacetime, to call for the immediate supply of everything they needed, and if the restoration of their industries depended entirely upon their own energy and skill, I would say that a year would be ample for them, and then if they were unable to do it within those twelve months they should pay the penalty. But that is not the case today. However efficient they may be, and however well their plans may have been laid, unless they can get the machinery, the labour and the building materials they

require, with all the will in the world they may find that they may not be able to restore their position within a year.
If the right hon. Gentleman says that twelve months is enough time for them to get on their feet again will he guarantee that within that twelve months, under the controls which the right hon. Gentleman is extending for five years, their reason able demands for labour, materials and machinery will be met? If the right hon. Gentleman will give that guarantee I think a great deal of our case falls to the ground, but if he does not give that guarantee our case is emphasised. We all appreciate the Chancellor's desire to fix this date. We all realise that a year, although we think it is too short, may be sufficient for some people. But we do appeal to him, if he does not feel it is possible for him to extend the date, that lie will consider the suggestion made by my hon. Friend and provide some degree of flexibility and some right of appeal for people who have not been able to complete within that date, so that they can say to the Government that it was due to no tardiness and no fault on their part, but to their inability, owing to the right hon. Gentleman's own controls, to secure those things which it is necessary for them to have if reconversion is to take place. If between now and the Finance Bill the right hon. Gentleman can give an assurance that he will think it over—I am sure he sympathises with the position—

Mr. Kirkwood: The right hon. and gallant Gentleman wants more than sympathy. The Chancellor has given him plenty of sympathy.

Colonel Stanley: Yes, I want more than sympathy, just as, when the hon. Gentleman got up at Question time yesterday to speak about the dockers, he attacked his own front Bench. He wanted more than sympathy but he did not get it.

Mr. Kirkwood: That is when the right hon. and gallant Member supported them against the dockers.

Colonel Stanley: I am more hopeful that the right hon. Gentleman will try to meet a legitimate claim, in the knowledge that we on this side of the House are not pressing for something which would reproduce the conditions of the last postwar period.

Mr. Dalton: I think we might bring this particular discussion to an end. It has lasted for some time. Gradually, as the discussion has proceeded, there has been a certain modification of the case put from the other side of the House. Earlier speakers began by saying that it was wrong, in view of all the circumstances, to fix the date as early as the end of December, 1946.Initially I was asked by speakers on that side of the House to extend the date, but, as the Debate has proceeded, the request has been modified, and the request now is, the date being accepted, that there might be some machinery for considering, what I gather it is admitted there might be, quite a small number of exceptional cases within the total.
That is a different proposition. I do not want to underestimate the administrative difficulties which, if we cannot solve them properly, will be very vexatious for the firms concerned and for the Inland Revenue who are seeking to administer. I know that we are all aware here of the difficulties that very often arise when a superficially plausible and attractive proposition is sought to be translated into forms of rules and Regulations that can be operated over a number of cases, the details of which cannot exactly be foreseen.
For that reason I do not want to give any commitment which hereafter I might be held to have violated. I say that I must hold to the date, end of December 1946, as the appointed day, but it has been generally recognised that at the end of the last war the deficiency payment became the greatest scandal and that the Revenue were robbed by all sorts of people many of whom adopted methods which were definitely dishonest. It as perfectly possible, under the deficiency arrangement, if it is allowed to run forward beyond the end of December 1946. I think I indicated that in my Budget Speech and it was pointed out in an article in "The Times" by one of those writers who write the turnover leader, He pointed it out, and I quoted it in my Budget Speech, and gave instances—his argument appealed to me and I think it was important—of a firm which might have a deficiency claim or could, so to speak, cook up a deficiency claim, by selling below cost and do severe damage to others in the industry. That is the sort

of case against which I think it is obviously proper to guard.

Mr. Jennings: Would it not be perfectly possible to track down that kind of man?

Mr. Dalton: No, because the greatest rascals often present the greatest simplicity of outlook. It is very often impossible in these gross cases to track the offender down. I do not suppose anybody here would find it easy to track down the kind of case that the "Times" writer and I have in mind, but we must prevent the possibility of the scandalous misuse of these deficiency payments.
That being said, I do not want to commit myself in any way, because it might be administratively difficult to do, and I must adhere to the end of December, 1946, as the operative date. The question is, Can we devise, and I will go into it and see whether we can—I want to be perfectly honest and I do not want to give a commitment if it is not possible to carry it out—devise any arrangement whereby, in quite exceptional cases, and they must be exceptional, it might be possible to have some possibility of appeal to some suitable body. I will look into the matter. I am not very hopeful that we can do it, but I will look into it in all good faith to see whether, in this case and the others which we have been discussing, anything can be done. The whole thing will be looked at again in a different form of procedure when the Finance Act is going through Committee, and then I will have an opinion either pro or con having looked into this matter. It will depend upon inquiries which I will make, and I will then make my statement to the Committee.

Sir F. Sanderson: I have no quarrel with the date, 31st December, 1946, at all. The point is that where a commodity is controlled by the Government, the industry may be compelled to carry beyond the end of the period, December, 1946, a portion of such stocks. There should be some means of setting Excess Profits against the difference in price, which the manufacturer may have to take, i.e., the difference between the purchase price and the Government controlled price at the time of sale and the realised price by the manufacturer—after the control has been removed.

Mr. Dalton: I cannot give a commitment on a very special and rather complicated case of that sort. We will look into the whole thing, including what the hon. Member has said.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

NATIONAL DEFENCE CONTRIBUTION

Fourteenth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Captain Marples: I will not delay the House very long but I think that the National Defence Contribution is rather heavy, in view of its elder brother E.P.T. I think it deserves mention because it undoubtedly taxes the equity and the equity holder, and they deserve a very great deal of consideration from the Chancellor of the Exchequer. I have been looking at the Financial Statement, and I find that the Chancellor of the Exchequer said, on 23rd October, when discussing E.P.T., that under those conditions this tax worked against the incentive and against efficiency. Then he goes on to say just one sentence about N.D.C. He said:
Meanwhile, I am leaving the National Defence Contribution unchanged."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1898.]
The Chancellor was extremely lucid and I followed his Budget Statement with the greatest ease. I did think he might have said a little more about the National Defence Contribution. His two arguments are inconsistent. On the one hand he is out to encourage incentive and I believe that is his intention, and on the other hand he does not make the slightest change in N.D.C. That position ought to be put right.
I was looking at some old Hansards and I turned up one in 1937 where, instead of just one sentence on N.D.C., we read a whole peroration by theright hon. Gentleman on the subject of the National Defence Contribution and how it affects unemployment. He said:
Any hon. Member who represents a special area could give the names of particular undertakings which are known to have been struggling on, many of them small undertak

ings and others of moderate size, but representing between them an appreciable amount of employment. They have struggled on in spite of all the depression and the exceptional burden of local rates. Unless some additional power of relief is given to the Commissioner, this tax will be imposed on the top of all the other taxes and local burdens, and it might indeed be the last straw which will break the camel's back with regard to many of these undertakings."—[OFFICIAL REPORT, 1st July, 1937; Vol. 325, c. 2201.]
I think that that is consistent with the right hon. Gentleman, for he is always lucid on these points. Having tracked that down, I agree with him that it is necessary to encourage the small businesses and the equity holders. We can compare the National Defence Contribution with the Corporations Profits Tax, which was imposed after the last war by Lord Snowden, the First Labour Chancellor of the Exchequer. He said of the Defence Contribution:
It was unloved by its parents. It was reviled by its subsequent guardians. It was condemned by every party, not least by the Labour Party.
I would ask the right hon. Gentleman to consider the early abolition of or some reduction in the National Defence Contribution because, not only is it a deterrent to private enterprise and the small equity holder and the small business, but it will, I think, give pleasure to Lord Snowden's ghost.

8.0 p.m.

The Solicitor-General: The observations which were made by the hon. and gallant Member with regard to the National Defence Contribution are equally applicable, and have already been made, to the series of taxes that we have been discussing.

Captain Marples: The Excess Profits Tax does not bear as hardly on the equity holder as the National Defence Contribution.

The Solicitor-General: I am surprised to hear that because the Excess Profits Tax is 100 per cent.—

Captain Marples: I think the Chancellor will agree with me on that.

Mr. Dalton: No, the Excess Profits Tax has been 100 per cent. standard. It was reduced, in effect, to 80 per cent. by the grant of the refund. It will be reduced, if the House agrees to my proposal, to 60 per cent. A tax of 60 per cent. is something very different from a tax of 5 per


cent., which is all that the National Defence Contribution is. There may be exceptional cases where the Defence Contribution represents a somewhat high proportion of the total earnings of a concern, but that will only be in very exceptional cases. Let me make it clear that, just as with the Purchase Tax on motor cars, I am giving no under taking—

Colonel Stanley: On a point of Order. I would like to know which of the right hon. Gentlemen is addressing the House, the Solicitor-General or the Chancellor.

Mr. Dalton: At this moment I am addressing the House. A special appeal was made to me by the hon. and gallant Gentleman to give my opinion, and I am glad to oblige him. My hon. and learned Friend was explaining with great lucidity a brief point and I am grateful to him, but I was specially asked to give my view. My view is that the Defence Contribution is a relatively slight burden in the great majority of cases, and I am not proposing to alter it in this Budget. Whether I shall alter it in the future I cannot yet say.

Question, "That this House doth agree with the Committee in the said Resolution" put, and agreed to.

FINANCE (COLLECTORS OF TAXES)

Resolution reported:
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of moneys provided by Parliament of annual allowances by way of compensation to any such collectors of taxes, collectors of land tax or other persons as may be designated by the Treasury, being collectors or other persons whose appointments are determined by the Commissioners of Inland Revenue after the thirty-first day of March, nineteen hundred and forty-six, and who were employed in and about the collection of income tax or land tax in the division of the City of London immediately before the passing of the said Act.

Resolution agreed to.

FINANCE (PAYMENT OF EXCESS PROFITS TAX REFUNDS)

Resolution reported:
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise
(a) the payment out of the Consolidated Fund of any sums required for making payments of, or on account of, sums payable tinder Section twenty-eight of the Finance Act, 1941 (which provides for the repay-

ment after the war of certain excess profits tax);
(b) the borrowing of money under the National Loans Act, 1939, for the purposes of providing the sums so issued."

Resolution agreed to.

WAYS AND MEANS

REPORT [25th October]

Resolutions reported:

AMENDMENT OF LAW

1. "That it is expedient to amend the law relating to the National Debt and the public revenue, and to make further provision in connection with finance."

CHARGE OF INCOME TAX FOR 1946–47

2. "That—
(a) income tax for the year 1946–47 shall be charged at the standard rate of nine shillings in the pound and, in the case of an individual whose total income exceeds two thousand pounds, at rates in the pound which respectively exceed the standard rate by the amounts specified in the second column of the Table below;
(b) all such enactments as have effect with respect to the income tax charged for the year 1945–46, other than such enactments as by their terms relate only to tax for that year, shall have effect with respect to the income tax charged for the year 1946–47.

Table


For every pound of—
s.
d.


the first five hundred pounds of the excess
2
0


the next five hundred pounds of the excess
2
6


the next one thousand pounds of the excess
3
6


the next one thousand pounds of the excess
4
6


the next one thousand pounds of the excess
5
6


the next two thousand pounds of the excess
6
6


the next two thousand pounds of the excess
7
6


the next two thousand pounds of the excess
8
6


the next three thousand pounds of the excess
9
6


the next five thousand pounds of the excess
10
0


the remainder of the excess
10
6."

INCOME TAX POST WAR CREDITS

3. "That no sums shall be credited under Section seven of the Finance Act, 1941, in respect of any tax for the year 1946–47 or any subsequent year of assessment."

First Resolution agreed to.

Charge of Income Tax for 1946–47

Second Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Captain Crookshank: May I raise a point of Order? It was the intention of some of my hon. Friends and I and, I think, of the right, hon. Gentleman, to say something at some stage on earned income allowances. I think that it would be in Order on either this or the Third Resolution. We obviously do not want to have two Debates on the same subject, and if the Chancellor prefers it, we could have it on the Second Resolution, but I do not want to let it go by and then be told that I have lost my opportunity.

Mr. Dalton: I would be happy if we could come to an agreement on the matter. If a discussion is desired on earned allowances, it might be taken on the Resolution dealing with Income Tax postwar credits.

Mr. Deputy-Speaker (Major Milner): If the House is agreeable, there will be no objection to that.

Captain Crookshank: I want to make a comment on the Resolution now before the House and call attention to the fact, which should be recorded, that in the forthcoming Finance Bill there will, as I understand it, as a result of our passing earlier in the day the Fourth Resolution of 23rdOctober, appear two separate sets of charges of Income Tax and Surtax. We have to put in the Surtax of 1945–46 which was in the Fourth Resolution, and now we are putting in the standard rate for next year and Surtax as well. They are linked together, but, as far as I know, no Finance Bill has hitherto had that double series of impositions laid out. I may be wrong in that, but if it is not unique it is very unusual.

Mr. Kirkwood: It is the first time we have had a Labour Government.

Captain Crookshank: It is nothing to do with having a Labour Government. I know that the hon. Member would wish to ascribe all things, good and bad, to that, but it has nothing to do with this question. It is due to the notice which is necessary in order to get the various codes and documents drawn up to collect the tax weekly on the lower ranges of income. That makes me wonder whether, in point of fact, it will not always be necessary to have this procedure and to have a second Budget. It will not necessarily be so unless the Chancellor in the autumn

has anything special he wants to tell the House, but he may be very chary of making a statement. We have already had that position in the last few weeks on other matters. Does he anticipate that it will be possible to devise any machinery which will prevent this? I do not know. I very much doubt it as things are and as they are likely to be for some years to come. That being so, it is worth the House noting the fact that this is the beginning of a new era in dealing with the financial details with regard to Income Tax and its imposition. Whether it will be in the long run a good thing that people should know so long ahead of changes in taxation, time alone will show, but on this occasion it seems to be necessary to do it. I therefore take no exception to it being before us, and I fancy that it will not be the last time.

Mr. Dalton: This point arises in two different aspects. In the first place, as the right hon. and gallant Gentleman has said, it is necessary under the existing arrangements for P.A.Y.E., which I inherited from my distinguished predecessor who is not a member of the Conservative Party. Under this arrangement which he devised, time has to be taken for the recoding and the working out of the Tables and so on. In my view—and I speak as a member of the Government which had a collective responsibility for this reform—P.A.Y.E. is much fairer to the Income Tax payers than the arrangement which preceded it. The principle underlying it is essentially sound and it was demanded for many years by hon. Members in all parts of the House. None the less, it has necessitated, in its first stage at any rate, the making of a very complicated administrative machine. We had to have a trial trip to see how it could be done. For a long time Chancellors of the Exchequer were advised that it was totally impossible, but gradually it has been found possible, and in this connection I should like to pay a tribute to the Inland Revenue staff, who have worked extremely hard at it and have shown very great ingenuity and flexibility of mind.
The other day, in reply to a Question, I mentioned that I was going into the matter to see whether we cannot simplify it still further as we get more fully acquainted with the problem, and I do not give up hope that we may be able to make a very substantial simplification and


there by at any rate shorten very much the period which now must elapse, from the point of view of administrative efficiency, between determining a change of Income Tax rates and its actual going into effect. We are working on that now, and in due course it will be my duty to inform the House of the result of our inquiries. That, however, is not the only reason why in this particular case there is a period of time which must elapse between the determination by the House of the new rates and their going into effect. There is the further reason, as I said in my Budget speech, that we must be exceedingly cautious and gradual in the relaxation of taxes, because between now and April we shall be in a period when production will not yet have picked up fully and the danger of inflation will therefore be great. In any case I should not have thought it right at once to give away the Revenue involved in allowing the lower rate to operate immediately. The new Surtax rate is also postponed because of the year of charge coming a year later.

Captain Crookshank: Mercifully.

Mr. Dalton: I am anxious to be merciful. What I have said, I hope, answers the right hon. and gallant Gentleman's point. We are going into it, and although at the moment we are in some difficulty, perhaps we shall be able to break out of it a little later.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

INCOME TAX POSTWAR CREDITS

Third Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

8.15 p.m.

Captain Crookshank: We have already had some discussion on this matter, and in so far as this Resolution says that no more postwar credits should be created after the tax year 1946–47 or any subsequent year's assessment, I should imagine that everyone would agree with it as a general proposition, because whatever one may say about it—and I notice that the Financial Secretary to the Treasury had very little good to say about it the other night—it still remains a fact that the post war credit system was introduced during the war as a set-off for the withdrawal

of certain allowances and the reduction of others. As the Chancellor has pointed out, postwar credits already amount to something like £575,000,000, with £225,000,000 more to come before the story is ended. Thereby, as Sir Kingsley Wood so often said to the House at the beginning of this affair, is created the difficult problem that there is this large amount of pent-up spending power on which a great number of people want to get their hands, in order to spend it. It is a problem of very great difficulty, with which the Chancellor has to deal and not I, or hon. and right hon. Gentlemen on this side of the House, but even if we grant that it would not be wise to continue the postwar credit system—and I have never heard it suggested in any quarter that it should go on in peace time, it was thought to be a war arrangement—we stilldo not feel that the right hon. Gentleman has dealt quite fairly with the persons from whom those allowances were taken and for whom postwar credits were set up, in the changes which he has made in his financial statement. There were three elements: the increased personal allowances, the raising of the exemption limit—these two the right hon. Gentleman has done—

Mr. Dalton: More than done.

Captain Crookshank: Never mind whether it is more than done at the moment. He increased the personal allowances, and therefore that element in the postwar credit has been restored—whether more or less is another matter; he has raised the exemption limit and therefore that element is back—whether more or less is irrelevant; but the element of the earned income allowance he has not given back. He said when he wound up the Debate on Thursday night that in his view there was no kind of pledge that what had been taken away would be given back exactly, but he did say also that there was a reasonable understanding that there should be some "comparable lifting of the allowances"—there I use his own words. It is very difficult to argue about the interpretation to be put upon what, I suppose, we in this House and the taxpayers concerned thought was a general understanding, but my recollection is that the idea was that when the post war credit system came to an end things should be put back as they were before, and then from that position additions or


subtractions would be made as circumstances allowed. The right hon. Gentleman does not accept that. He says, "So long as I put in the same amount"—or, as he has fortunately been able to do for some people, more—"I have done all and more than was expected of me." In his argument, one of the advantages in taking that line has been that he has been able to give benefit to 2,000,000 people, whereas if he had put back the situation as it was there would have been only 1,600,000. Therefore 400,000 more people have benefited to some extent or another, and we must not mind about the people who are worse off, if any.
The hon. Member for South Cardiff (Mr. Callaghan) said the other night that it would be quite wrong for it to go out from this House that on the whole people will be worse off as a result of this Budget. It all depends on what you mean by "on the whole"—on the whole, or in the hole, perhaps, because it is undoubtedly true that by the non-return of the earned income allowance element in the postwar credit some people will be worse off. There has been some argument on that. Some of my hon. Friends pointed that out during the Debate the other day, and one hon. Gentleman opposite—I cannot remember if it was the hon. Member for South Cardiff or not—brought out the tables and said, "There you are—everybody is going to have a less charge during the year to which these tables apply than before, therefore how can they be worse off?" That sounded like a complete destruction of the argument put by some of my hon. Friends, but what the hon. Gentleman forgot, and what these tables do not in fact disclose, is that no account whatsoever is taken of the value of the postwar credit, which ofcourse is, and must be assumed by everybody to be, worth its full value. If it is not worth that, the whole of our financial system has in fact gone astray, because we all stand behind the fulfilment of the State's obligations, and no one has been more strenuous in saying that than the present Chancellor of the Exchequer.
I have some figures which I think are correct. Take the case of a married couple, with one child, earning £500 a year. According to the table, the charge at present is £101 2s. 6d. and the proposed charge next year is £72 15s. Look

ing at that in its simplicity, it would appear that that man will be saving £28 7s. 6d. a year in tax. But at the moment that particular man is receiving £31 10s. postwar credit. [Interruption.] He is being credited with that amount. I hope that is not so different. He is not getting it in pounds, shillings and pence at this moment, but he is getting a credit which is supported by the whole of this country's credit, and that postwar credit is worth and I trust always will be worth, its face value. Next year, the £31 10s. credit will not come to him, but instead he will get a tax relief in pounds, shillings and pence—out of his own pocket—of £28 7s. 6d. The difference between those two figures is £3 2s. 6d., and to that extent he will be out.
It is true that in one case there will be actual coins of the Realm which he will not be giving to the tax collector, and that in the other case it is a figure on a piece of paper which is drawn upon the credit of the nation and which will be repaid at some time. Therefore, it is true that such a man is to the extent I have mentioned worse off. Hon. Members may think differently, but it remains the fact that if you take the whole of the liability and the whole of the receipts and count, as I am sure the taxpayer should be entitled to count, the postwar credit as the equivalent of cash to be paid at some future date, that man will be worse off to the extent I have mentioned, and he will be worse off for one reason only—because the right hon. Gentleman the Chancellor has not put back the earned income allowance. I shall be very glad if I am proved to be wrong, and so will my hon. and right hon. Friends, but we have no reason to suppose that we are all poor mathematicians. [Interruption.] The hon. Member for West Fife (Mr. Gallacher) has not been here all day listening to the Debate. He simply flits in and out and makes noises. I should be glad if he would take an interest in these financial matters and adorn our Debates on financial matters.

Mr. Gallacher: The right hon. and gallant Gentleman is missing a fact. If he is discussing this from the point of view of finance, surely it is an understood and recognised feature in all finance that if you leave a sum of money in the hands of the Government for a period of time,


you will get interest, along with the original sum. Therefore, if the man to whom the right hon. and gallant Gentleman is referring gets the money now instead of leaving it in the hands of the Government, he will not get the interest that is included in the postwar credit.

Captain Crookshank: That is so "recognised" that it has nothing whatever to do with the matter. There is no interest attached to the postwar credit, and never has been. It would have been much better if the hon. Member had listened to some of these Debates, not only this year but in years past, and then he would have known what the situation was. Quite apart from the fact that in certain cases there are people who will not get so much relief as the Chancellor appeared to indicate in his speech, there is a second point to which we on this side attach some importance and about which I hope the right hon. Gentleman will be able to give us some information. Throughout his statement the Chancellor kept on repeating that the idea was to give some incentive. The biggest incentive that could be given would be to increase the earned income allowance. Anything that will induce people to earn more, to work more in order to earn more, must be to the good of the nation as a whole. Everybody is agreed that if we are to catch up with the world at large, if we are to recreate our trade and get out exports going again, we must work hard. Employers and trade union leaders alike have repeatedly urged people to put their backs into it and to work hard in order that we may return to something of the standard of life which the masses of our people enjoyed before the war started. Why at this particular time the Chancellor should not have put back that element in the postwar credits which was taken away, why he should not have improved the allowance for earned income is beyond my understanding. I very much hope that the right hon. Gentleman may be able to make some concession and that he may be able to indicate what is in his mind on the subject. I feel he has made a misjudgment in this matter. He would be very fortunate if he got through the whole Budget without making any misjudgment. I feel this is the weak point, and I should be very happy if he could give us some encouragement and tell us that he has not entirely closed his mind on this subject.

Mr. Dalton: This is largely, if not wholly, a question of arithmetic and the interpretation to be placed upon figures. It is not always easy to be clear in these matters, but I will endeavour to be as clear as I can. Certain points are not in dispute. In the Finance Act, 1941, the postwar credits were instituted, and co-incidentally with that certain changes were made in the exemption limit, in the personal allowances and in the earned income relief. Those were the only three changes held to be associated with the postwar credits. It would have been possible for me—and I considered it carefully when preparing the Budget—simply to have restored the status quo. I did not do that. I have created a different system of allowances, and I will explain how they differ. I consider I have done much better for the community at large—I will deal with exceptional cases in a moment—by what I have done than I would have done if I had simply restored the status quo. The exemption limit was reduced in 1941 from £120 to £110. I have put that back. I have put them back; that is as it was, and I have nothing further to say about it.

8.30 p.m.

The single person's allowance was reduced in 1941 from £100 to £80 a year. I have not only put back that allowance from £80 to £100, but I have gone further and have put it up to £110. I will emphasise what that means. As far as the married couples' allowance is concerned, I have not merely put it up from £140 to £170, but have put it up another £10 to £180 a year. I have altered that allowance, and I observe that as a result of doing so I have conferred a much greater benefit upon a large number of people near the bottom of the Income Tax paying scale than I would have done if I. had reconstituted the arrangements of 1941. If I had reconstituted those arrangements exactly as they stood we would have cleared 1,600,000 persons from paying Income Tax, but I have cleared 2,000,000 persons from paying Income Tax, and I believe, apart from acting in fairness to those people who were not really in an economic position to pay Income Tax without depressing their necessary standards of life, it is a much better incentive to get them off paying Income Tax. I am sure that the right hon. Gentleman opposite would find it so if it


happened to him. He would find a tremendous incentive in taking Income Tax off these people altogether preferably to dealing with the arrangement of our allowances. Therefore these two particulars, in which I have gone beyond the 1941 Act, have, I submit, been justified in their objects by reaching a larger number of persons at the lower end of the scale.

That is not all that I have done. I have also regraded the standard rate apart from reducing it. I have instituted something which was not operating in 1941; I have instituted a specially reduced rate of tax at only 3s. in the £ next year on the first £50 of taxable income after all allowances have been made. That will have a very beneficial result on persons in the lower strata of those who are subject to tax. I emphasise the 3s. in the £ only on the first £50 of taxable income. In addition I have reduced the standard rate by 1s. That is a bonus in the terms of this arrangement. There was no undertaking when Post War Credits were created that, when they were stopped, we would get a reduction of the standard rate, and, therefore, the reduction of the standard rate is a substantial concession.

I have deliberately not altered in this interim Budget—and I emphasise "this interim Budget"—the earned income allowance. I reserve full liberty to do that on a future occasion. It is what we would all like to see done and what I would like to do, but it does not come within the first priority in this Autumn Budget. The result of this group of changes that I have made is completely and sufficiently shown as far as next year is concerned, and that is all that the White Paper purports to show. What is shown in my White Paper is exactly what is intended to be shown. The tables show the difference between what is being paid now and what will be paid next year when the changes take effect and show that every person from the top to the bottom of the scale, and in all scales, will be better off next year as a result of what I have done.

The Post War Credits are not shown in these tables because there is no assurance that—indeed, I am pretty certain it is the other way—Post War Credits will be paid back next year. They will be kept. The people are credited with those Post War Credits and the exact date when they can be repaid, as I indicated, depends on

the general situation with regard to production and the danger of inflation, which would be very great. If we allowed a substantial part, if not the whole, of the £800,000,000 locked up in Post War Credits to be paid back, there would be a great danger of price control being overrun by an inflationary flood and none of us want to do that. If you look at what is to be done next year, and the White Paper tells the truth and nothing but the truth, the calculations which the right hon. and gallant Gentleman has been going into are all based on fallacy. It is the case of a person who it is said will be worse off by reason of relief of Income Tax next year because the relief is less than the Post War Credit which would have been credited to him if it had not been terminated.

It is a fallacy to argue that you can compare an actual reduction of taxation which is shown in everybody's pay packet, bank account and income, with the fact that you have been credited with a sum of money which you are not going to get next year but later on. By the time they get the Post War Credits we may have gone further—I make no commitment—considerably further with regard to reduction of taxes on certain groups of people. We very likely will. I would like none the less, pursuing the right hon. and gallant Gentleman's line of thought, to tell him the result of an inquiry we have made in the Inland Revenue. Assuming the basis of calculation is correct, which I do not admit, I repeat that next year everybody is going to be better off as a result of what I have done, including the people whose case he was taking. But suppose it is a reasonable presentation of the case to take it as he took it, and that you will deduct from the tax advantage which the individual person will get as a result of my Budget the Post War Credit which would have been credited to him if I had not brought the system to an end. Even so, what is the position? There are now, before my changes in Income Tax begin to operate, 13,000,000 people liable to Income Tax. I am going to clear 2,000,000 of them entirely, but even on the assumption underlying the speech of the right hon. and gallant Gentleman there will not be more than 1,250,000at the outside, and perhaps not more than 1,000,000 out of all these 13,000,000 people who, even on his basis of calculation, will be worse off as a result of what


I have done. The vast majority, even on his basis of calculation, which I do not admit, would be better off as a result of what I have done.

I have redistributed these allowances in such a fashion that I have conferred a substantially greater advantage upon an overwhelmingly large proportion of those concerned. Even the minority, on the basis of the calculation which he has taken, who are less well off on the unreal assumption that they would be getting their post-war credit at once, which they are not, are only at the outside one-twelfth of the whole Income Tax paying population and they do not include the millions of those most in need of this relief. At the lower ranges, even on the right hon. and gallant Gentleman's computation, they secure relief as a result of what I am doing.

I do not know whether I have succeeded in making that clear. It is not altogether easy to make it clear, but it is clear in my own mind. Naturally, perhaps, I can understand it a little better than other Members, but it is the fact that I have taken a decision to the greater advantage of the greatest number and, repeating that earned income allowance is one which I should like very shortly to restore in whole or in part, I hope that the House will agree that we can go forward with general approval of what I have proposed. I make this further qualification about the earned income allowance. Some people speak of it as only a fraction of the earned income which is allowed.

It is common to say that the earned income allowance was one-sixth and has now been reduced to one-tenth. But there is another element in the earned income allowance; there is a maximum amount of allowance that can be gained by any one taxpayer in any one year. It used to be one-sixth off, with a maximum of £250 per taxpayer. It is now one-tenth with a maximum of £150 per taxpayer. I make no undertaking that if I restore the earned income allowance in respect of the proportion, I will also restore the total maximum advantage gained by any taxpayer. If I were to restore it simply to the way it existed in 1941, I should, in effect, be giving a bonus of £100 under this head alone to all persons, however rich, who could claim that they had a certain quantity of earned income. I am not committing myself to do that, but I am anxious

to do something to assist earned incomes in the lower ranges by some modification of the present plan which will bring us a larger differential in favour of earned, as against unearned income, but to restore the old earned income allowance just as it was is not, perhaps, a thing we should be wise to do. I hope I have succeeded in making myself plain to the House, and that my statement will be accepted as, at any rate, bringing a little clarification into the matter.

Mr. Gallaghan: As the right hon. and gallant Gentleman was good enough to refer to something I said, may I quote what I said in a nutshell? I base myself on what he said, that there is need for an incentive and that we must all work hard and put our backs into it. The question he should address to himself is whether it is really an incentive to make a man pay 7s. 6d. now, or to give him 7s. 3d. now and to say the 3d. we are taking is a discount for prompt payment. That is really the whole difference. The Chancellor is actually putting 7s. 6d. into the man's pocket. What the right hon. and gallant Gentleman was asking was that he should take it out of the man's pocket now, and say that in x years he should have the 3d. back.

Lieut.-Colonel Dower: I do not think there are any Members at this moment who will not say that this is a Budget which we do not considerably approve of, but I think it is a great shame to finish by saying that the person whose income is not derived from investments, but is capable of earning £2,500—I think that is the right amount—shall have no alleviation in the future.

8.45 p.m.

Mr. Dalton: I said I was not going to commit myself at this stage either to restore the income allowance to the exact form it was before, though I would like to do something to increase the differential between earned and unearned incomes, and that to restore the top limit just as it was was not a thing we should be wise to do.

Lieut.-Colonel Dower: I should just like to repeat my remark that we wanted to have that quite clear so that no discouragement will be given to these people who also want to play their part in reconstruction through their own efforts.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Bill ordered to be brought in upon the said Resolutions and upon the other Resolutions reported from the Committee of Ways and Means, and the Resolutions reported from the Committee on Finance (Collectors of Taxes and Finance (Payment of Excess Profits Tax Refunds), and agreed to this day, by the Chairman of Ways and Means, the Chancellor of the Exchequer and Mr. Glenvil Hall.

FINANCE BILL

"to grant certain duties of Customs and Inland Revenue (including Excise), to alter other duties and to amend the law relating to Customs and Inland Revenue (including Excise) and the National Debt, and to make further provision in connection with finance," presented accordingly, and read the First time; to be read a Second time upon Monday next; and to be printed. [Bill 28.]

PURCHASE TAX (COPPER DOMESTIC HOLLOW-WARE)

Motion made, and Question proposed,

"That the Purchase Tax (Alteration of Rates) (No. 3) Order, 1945 (S.R. &amp; O., 1945, No. 1202), dated 26th September, 1945, made by the Treasury under the Finance (No. 2) Act, 1940, a copy of which Order was presented on 9th October, be approved."—[Mr. Glenvil Hall.]

Mr. Butcher: I do not want to detain the House more than a few moments, but I am sure there are other Members in this House besides myself who would wish to hear from the Financial Secretary why, just at the present time when there are so many young families trying to set themselves up in homes, when these popular hardware utensils are coming on to the market it should be the policy of this Government not to exempt them from tax altogether, but only to make this negligible reduction in the Purchase Tax.

Mr. Glenvil Hall: What is being done is to reduce the Purchase Tax from 33⅓ to 16⅔ per cent. That reduction will mean a certain loss of revenue. If the tax had been taken off altogether, the Chancellor of the Exchequer would, of course, have included these in the list of articles in the

Resolution which we have been debating today. As that was not possible, the Government have decided to make a reduction by this means, and I hope the House will accept it.

Question put, and agreed to.

PURCHASE TAX (VARIOUS DRUGS)

Motion made, and Question proposed,

"That the Purchase Tax (Exemptions) (No. 2) Order, 1945 (S.R. &amp; O. 1945, No. 1263), dated 9th October, 1945, made by the Treasury under the Finance (No. 2) Act, 1940, a copy of which Order was presented on 16th October, be approved."—[Mr. Glenvil Hall.]

Mr. Butcher: Again, I would like to ask the Financial Secretary two perfectly simple questions. There has been a great deal of feeling among the less fortunate people of the country that some of the more simple and household remedies should no longer be subject to the Purchase Tax. The two things I have in mind are camphorated oil and cough mixture for children. Perhaps the hon. and gallant Gentleman, the Financial Secretary, will be so good as to say whether these two articles, in common use in every home where there are children, cannot be exempted from Purchase Tax. [Interruption.] If the hon. Member will rise in his place and ask me to give way, I will do so with pleasure.

Mr. Kirkwood: What I was saying was that cough mixture only poisons children. I am the father of seven, and we never had anything of the kind in the house.

Mr. Butcher: I conclude by asking the right hon. Gentleman if he will say whether these ordinary, simple and domestic recipes are still to be subjected to tax by this Government in its new found desire to assist the poor and the humblest in the land.

Mr. Glenvil Hall: The short answer is that, in so far as they are taxed now, obviously, that tax will continue for the moment, because this order deals only with the drugs which are mentioned, many of which have names which few of us would like to pronounce and probably would not know what they meant, in any case. In so far as the medicines mentioned by the hon. Member are proprietary articles, obviously, they are not exempt, in any case.

Question put, and agreed to.

PURCHASE TAX (HAND MADE CARPETS, RUGS AND MATS)

Resolved:

That the Purchase Tax (Alteration of Rates) (No. 4) Order, 1945 (S.R. & O., 1945, No. 1272), dated nth October 1945, made by the Treasury under the Finance (No. 2) Act, 1940, a copy of which Order was presented on 16th October, be approved.

EXPIRING LAWS CONTINUANCE BILL

Bill read a Second time, and committed to a Committee of the Whole House, for Monday next.

EXPIRING LAWS CONTINUANCE [MONEY]

Considered in Committee under Standing Order No. 69.

[Major MILNER in the Chair]

Resolved:
That for the purposes of any Act of the present Session to continue certain expiring laws, it is expedient to authorise—
(a) the payment out of moneys provided by Parliament of such expenses as may be occasioned by the continuance of Part I of the Coal Mines Act, 1930, and the Cotton Manufacturing Industry (Temporary Pro visions) Act, 1934, until the thirty-first day of December, nineteen hundred and forty-six, and of the Debts Clearing Offices and Import Restrictions Act, 1934, and the Pensions (Increase) Act, 1944, until the thirty-first day of March, nineteen hundred and forty-seven, being expenses which, under any of the four last-mentioned Acts are to be defrayed out of such moneys; and
(b) the payment into the Exchequer of such receipts as may be occasioned by the continuance of the Debts Clearing Offices and Import Restrictions Act, 1934, until the said thirty-first day of March being receipts which under that Act are to be paid into the Exchequer.—(King's Recommendation signified)—[Mr. Dalton.]

Resolution to be Reported Tomorrow.

BANK OF ENGLAND BILL

Motion made, and Question proposed,
That the Committee do consist of six Members, four to be nominated by the House and two by the Committee of Selection."—(Mr. Dalton).

8.55 p.m.

Sir John Mellor: I want to ask the Chancellor of the Exchequer what are the precedents with regard to the numbers of members to be

selected by the House and by the Committee of Selection. The Motion provides for four to be nominated by the House and two by the Committee of Selection. I am informed that the rule, generally, has been, in the case of hybrid Bills, to have three members nominated by the House and two by the Committee of Selection. I want to ask what is the particular reason for adding twice the number nominated by the House as by the Committee of Selection in this case, and whether it would not be more appropriate to have three members nominated by the House and three by the Committee of Selection.

8.57 p.m.

Mr. Dalton: So far as my information goes, we are following practice, and there is no departure from practice in this case. I understand that, in the case of a hybrid Bill, it has to be examined by a Select Committee before returning for the normal Committee Stage here, and, so far as my information goes, there is no departure from past practice in this arrangement. There is, of course, the alternative whereby the Bill may go to a Select Committee of this House, and, at a subsequent stage in its progress, to a Select Committee of the other House, or to a Joint Select Committee of both Houses, but it appears to the Government to be better for it to go to a Select Committee in this place, and that would mean that their Lordships might appoint a Select Committee later on.

Question put, and agreed to.

Motion made, and Question proposed,
That all Petitions against the Bill presented at any time not later than seven clear days after the Second Reading of the Bill, be referred to the Committee;

Mr. Gallacher: Would it be in Order for me to nominate one or two members now?

Mr. Deputy-Speaker (Major Milner): No, it would be out of Order.

Sir William Darling: This is the first hybrid Measure to come before this House for many of us, and I was struck by the fact that four Members of the Committee should be nominated by the House—

Hon. Members: Order, order.

Mr. Deputy-Speaker: The House has already passed that Resolution.

Question put, and agreed to.

Resolved:
That Petitions against the Bill may be deposited in the Committee and Private Bill Office, provided that such Petitions shall have been prepared and signed in conformity with the Rules and Orders of this House relating to Petitions against Private Bills;

Resolved:
That the Petitioners praying to be heard by themselves, their Counsel, or Agents, be heard against the Bill, and Counsel or Agents heard in support of the Bill;

Resolved:
That the Committee have power to report from day to day the Minutes of Evidence taken before them."—[Mr. Dalton.]

Motion made, and Question proposed, "That three be the Quorum."

Sir W. Darling: I was going to refer to the question of three being the Quorum, but the House has decided that the Committee should include four Members nominated by the House, and it would seem to be necessary that half its number should form a Quorum. The usual practice is for a Quorum to be four, not three, and I think attention should be given to this matter and that the number of the Quorum should be raised to four.

Mr. Dalton: In these matters, we desire to be most conservative and to follow the best established use, and I would like to assure the hon. Member, who has just recently arrived from Edinburgh, that, in supporting three, he is in the best sense conservative.

Sir W. Darling: We are very gratified that the right hon. Gentleman—

Mr. Deputy-Speaker: The hon. Member cannot speak twice at this stage.

Question put, and agreed to.

BANK OF ENGLAND [MONEY]

Considered in Committee. [Progress 29th October.]

[Mr. HUBERT BEAUMONT in the Chair]

Question again proposed,
That for the purposes of any Act of the present Session to bring the capital stock of the Bank of England into public ownership and bring the Bank under public control, to make provision with respect to the relations between the Treasury, the Bank of England, and other banks and for purposes connected with the matters aforesaid, it is expedient—
(a) to authorise the Treasury to issue to holders of capital stock of the Bank of Eng

land (hereinafter referred to as 'Bank stock'), in exchange for Bank stock held by them, such an amount of stock (hereinafter referred to as 'Government stock') bearing interest at the rate of three per cent. per annum that the sum payable annually by way of interest thereon will be equal to the average annual gross dividend declared during the period of twenty years immediately preceding the thirty-first day of March, nineteen hundred and forty-five, upon the amount of Bank stock held;
(b) to authorise the charge on the Consolidated Fund of the principal of and interest on the Government stock, and any expenses incurred in connection with its issue or redemption and any remuneration payable in respect of its management;
(c) to authorise the Treasury, for the purpose of providing any sums required to redeem the Government stock, to raise money in any manner in which they are authorised to raise money under the National Loans Act, 1939;
(d) to authorise the payment into the Exchequer of sums paid by the Bank of England to the Treasury in lieu of dividends on Bank stock, and to authorise the issue out of the Consolidated Fund of sums so paid into the Exchequer and the application of sums so issued in payment of interest otherwise payable out of the permanent annual charge for the national debt."

9.0 p.m.

Sir J. Stanley Holmes: On Tuesday last we had a discussion on the First Reading of the Bank of England Bill and in the course of the speech which I had the privilege of making to the House I asked if the Financial Secretary to the Treasury, when he was replying to the Debate, would state the amount of the reserves of the Bank of England. It was quite clear at the conclusion of his speech that he was not going to reply to that question, and therefore I venture to intervene. I asked:
Would the Minister be good enough to answer the question which I asked him earlier this evening? What is the amount of the Reserve Fund of the Bank of England?
The hon. Gentleman replied:
The answer is that that question is quite irrelevant.
which I am afraid caused a considerable amount of amusement to the other side of the House. However we did get one statement afterwards when he said that the price to be paid had been based on the market price of the present stock, but that did not answer the question I put to him. My right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) subsequently joined in this Debate, together with others on this side


of the House, with the result that the Chancellor got up and immediately showed himself to be very annoyed and very bad tempered. He said:
If hon. Members want the answer, I will give it; if not, we will take the vote."—[OFFICIAL REPORT, 29th October, 1945; Vol. 415, c. 189–195.]

The Deputy-Chairman (Mr. Hubert Beaumont): I would remind the hon. Member that we are now in Committee, this is not the Second Reading. Will he kindy relate his remarks to the Motion that has been made?

Sir J. Stanley Holmes: That is what I am endeavouring to do, Mr. Beaumont. I thought I was able to give the reason why, when this Motion, now in Committee, came before the House as unopposed business on Tuesday night, I should object and carry it forward so that we might debate the matter further tonight. The reason was because the Chancellor himself had not given an answer to the question, which was, what are the reserves of the Bank of England? After all, although the Chancellor uses the word "I" all the time—he did in his Budget speech and he has done so in various speeches tonight—

The Deputy-Chairman: The hon. Member is again wandering away from the matter under discussion. Would he kindly relate his remarks to the Motion?

Sir J. Stanley Holmes: I wanted to point out that this is a matter—if you will allow me to go two sentences further, Mr. Beaumont—which concerns the House of Commons. However often the Chancellor of the Exchequer may say, "I am giving this allowance," "I have made this bargain," it is not he who is doing so, it is the nation who are doing it. We want to know, therefore, whether a good and fair bargain has been made in the purchase of these Bank of England shares. There are Members on the opposite side of the House who spoke in the Debate on Tuesday, and who said that in their opinion the price was too high. But there are those on this side who think that the price is too low. [Hon. Members: "Oh."] If Members will examine what every responsible man in the Labour Party has said in the past about nationalising industry they will find that it has always been said that compensation shall be at a fair price.

Mr. Kirkwood (Dumbarton Burghs): It depends upon what the hon. Member means by "fair."

Sir J. Stanley Holmes: I quite agree. The hon. Member's idea and my idea as to what is fair are the same.

Mr. Guy (Poplar, South): Who is complaining?

Sir J. Stanley Holmes: At the moment, nobody, because nobody knows the facts. If there is £14,000,000 worth of stock in the Bank of England at the moment the stockholders are being paid £58,000,000 for it. I have reason to believe that the reserve funds of the Bank of England are sufficient to enable the stockholders, if they wound up the company, to obtain a far greater sum than £58,000,000. There can be no business in this country that could be more easily liquidated than that Bank. Theyhave their investments, which could be realised, and their loans to the joint stock banks and to others, all of which could easily be called in. I believe that if the stockholders called a meeting and put the Bank into liquidation they would obtain for themselves a division, pari passu with their stock holdings, of considerably more than £100,000,000, as compared with the £58,000,000 which they are now being offered by the Chancellor.
Why is the Chancellor keeping this dark? Why does he not tell us? I am sure he is not going to tell us that he made a bargain with the directors of the Bank of England to buy their stock for £58,000,000 without seeing the balance sheet, the list of investments, and particulars of the whole of the assets. He must know what are the reserve funds of the Bank and the value of the net assets—that is, the difference between the value of the gross assets, less the liabilities of the Bank—compared with the amount which he is paying to the stockholders. So, I ask him now, as I asked the Financial Secretary the other night, and as my right hon. and gallant Friend the Member for Gainsborough asked the Chancellor, to tell us what are the reserve funds of the Bank of England.

Sir John Mellor: I make no apology for opposing this Financial Resolution. Yesterday, after Question Time, the Leader of the House


said he understood that it had been agreed officially with the Opposition that this Resolution should go through. I do not know exactly what he had in mind, but I should imagine that at any rate any understanding there might have been was no longer binding after the Chief Government Whip moved the closure before the end of the time available for Business on Monday. If any one should, none the less, criticise me for opposing this Resolution now, I would pray in aid what Mr. Speaker said on the occasion when he was called to the Chair, at the beginning of this Parliament:
I have been a back bencher for a long time, and when we saw the two Front Benches, Government and Opposition, putting their heads together, we always used to say, 'well, the back bencher is going to get a dirty deal'."[OFFICIAL REPORT, 1st August, 1945; Vol. 413, c. 8.]
The reason why I oppose the Financial Resolution is that it is drawn much too tight. The particular part of it with which I am concerned are the words which deal with the question of compensation. I perhaps may be permitted to quote them, leaving out the unnecessary words:
…it is expedient (a) to authorise the Treasury to issue to holders of capital stock of the Bank of England…in exchange for Bank stock held by them, such an amount of stock…bearing interest at the rate of three per cent. per annum that the sum payable annually by way of interest…will be equal to the average annual gross dividend declared during the period of twenty years immediately preceding the Thirty-first day of March, Nineteen Hundred and Forty Five, upon the amount of Bank stock held.
These terms are so tight that they will prevent in Committee, if I am right in my view, any Amendment whatsoever of the compensation provisions, except one. The only respect in which the Committee would have any discretion to amend the Bill would be in respect of the terms of redemption. I think that is really a very drastic proposition, which we have to face. What would be the use of a Select Committee hearing evidence presented on behalf of the petitioners, who themselves would be represented by counsel, who would argue their case upon the issue of compensation, if the Committee were quite incapable of introducing any Amendment into the Bill? I think it probable that the Select Committee would take the view that it was no use their hearing any evidence at all on the question of compensation, except upon the terms of redemption

which should be attached to the Government stock. Not only the Select Committee, but, for the same reason, I submit, on the issue of compensation, all other stages of this Bill in this House would be reduced to a farce.
The hon. Member for Harwich (Sir Stanley Holmes) made out a strong case why we should be told, at this stage, what is the value of the assets of the Bank of England. I wish we could be told that now, because it has a real bearing upon the question of compensation, and upon the question whether this Clause is drawn too tightly or not. What would be the use of that information being supplied to the Committee, if they have no discretion, whatsoever, after considering that information, to amend the provisions of the Bill. This is a question which was discussed in more general terms, in a most interesting Debate which took place in 1937, when the present Prime Minister, at that time Leader of the Opposition, made a very important speech. Hesaid this:
I deemed it to be my duty, as Leader of the Opposition, to call attention to what I consider to be the danger of Members losing their privileges in this House. There is no party issue raised…
He proceeded:
Look at what is happening today. Members get indignant. It is found, when a Bill comes forward in which they are interested, that the whole matter is dealt with in the Financial Resolution. With great care they draft Amendments, but those Amendments are out of Order. They find it is no good waiting for the Bill because the Bill is governed by the Financial Resolution, and the Financial Resolution having been passed, they cannot get their Amendments called. That is not fair to this House."—[OFFICIAL REPORT, 8th March, 1937; Vol. 321, c. 815, 819–20.]
9.15 p.m.
Those are the words of the present Prime Minister. In consequence of that Debate a Select Committee was appointed to consider procedure relating to Money Resolutions, and in the course of their Report these words appear. They recommend
that any detailed provisions which define or limit the objects and conditions of expenditure contained in a Bill should, if and so far as they are set out in a Financial Resolution, be expressed in wider terms than in the Bill, so as to permit amendments to the Bill, which have for their object the extension or relaxation of such provisions, and which do not materially increase the charge.


This is an admirable case in point. This Committee should scrutinise very carefully the terms of this Financial Resolution, and if they come to the same conclusion as I do, namely, that it will leave no scope for Amendment of the Bill in respect of the compensation terms, they should reject the Resolution, and the Resolution should be redrafted and re-presented by the Government to this House.

9.17 p.m.

The Chancellor of the Exchequer (Mr. Dalton): It might be for the convenience of the Committee if I said a few words on the two points that have been raised. If I may take, first, the second point raised by the hon. Gentleman the Member for Sutton Coldfield (Sir J. Mellor), I would say two things on the form of the Money Resolution. In the first place, there has been dispute, and the hon. Member has been citing examples of dispute in the past, as to what is the proper form of such a Resolution. This Resolution is in line with many which, in the past, the House has accepted on other Bills. This is a Hybrid Bill and, therefore, a new stage is interposed between the proceedings on the Second Reading, with the Money Resolution, and the resumption of consideration of the Bill in its Committee stage here. The Select Committee stage is introduced expressly with a view to enabling full consideration to be given to questions of finance, and in particular, to compensation in regard to this Bill. About half an hour ago the House passed a Resolution in which it was laid down that a Select Committee shall hear petitions through counsel and so forth; so that, in this regard, an additional stage is put in, which will enable the matter which the hon. Gentleman has in mind to be very fully considered by Members of this House, sitting as a Select Committee.
That being so, I think we are justified in drawing this Money Resolution in the form in which it is drawn, and which is in line, as I have said, with the form of many similar Resolutions in the past. Had no Select Committee stage been interposed, it might strongly and powerfully have been argued that the Money Resolution was too narrowly drawn; but because there is the Select Committee stage, and we will be able to go into the matter more fully and to much greater

length man this House would wish to do here in Committee, it appears to me that the form of the Resolution, in these circumstances, is appropriate. If the Select Committee should reach the conclusion that the terms of compensation contained in the Bill ought to be substantially amended, I do not commit the Government to accept the recommendations of the Select Committee, but I am prepared to give the undertaking that, if they did so report, we would, if necessary, bring in a fresh Resolution to enable their recommendations to be considered by the House, whether or not the Government would, at the time, accept them. I hope that undertaking will satisfy the hon. Gentleman that there will be no difficulty if the Select Committee recommend that some change should be made.

Sir J. Mellor: While I am obliged for what the right hon. Gentleman has said, I would point out that that, of course, applies only to the Select Committee; but when the question comes back again to the House, Amendments to enlarge the compensation will not be in Order, having regard to the terms of the Financial Resolution. We could not even get our Amendments called.

Mr. Dalton: No. I am anxious to meet the Committee, and the undertaking I have given is that if the Select Committee, who will be free to discuss the matter, recommend that the compensation terms should be altered in any direction, either up or down, we will, if necessary, bring in afresh Money Resolution so that it can be discussed by the House. You cannot go on having a lot of bites at one cherry, and, in view of the fact that this is a Hybrid Bill, if the Select Committee do recommend that the compensation terms are right and should not be altered, either up or down, I do not think this Money Resolution can be held to be too narrowly drawn. At any rate, I have made my offer to the Committee and I hope they will think it is reasonable.

Sir J. Mellor: I appreciate what the right hon. Gentleman has said, but assuming the Select Committee do not recommend any change in the provisions for compensation, some hon. Members may take a different view and after carefully studying the Report of the Select Committee may still wish to move Amendments. Hon. Members surely should not


be prevented by the terms of the Financial Resolution from moving Amendments. I submit that the passages I have read indicate that a Financial Resolution should not be used for that purpose.

Mr. Dalton: That did not apply to Hybrid Bills. This I repeat is a Hybrid Bill. A Hybrid Bill is a Bill in respect of which a new stage is interposed. Because there is interposed this new stage, whereby much more elaborate and lengthy discussion on this matter can take place, than is possible in a Committee of, this House, I suggest that if the Select Committee consider that the terms of compensation are fair, this Resolution, according as it does with many Resolutions accepted in the past, will have provided sufficient opportunity for discussion.
I pass to another point. An hon. Member was anxious that I should name a figure to cover the value of the Bank's reserves, as he called them, although I think what he really wants to know is the value of the total assets of the Bank. He spoke rather gloomily about liquidation. It is not part of the policy of His Majesty's Government to liquidate the Bank. It will not be done under this Government. I am not thinking of it in terms of liquidation, nor are any of us thinking of it in that light. What the hon. Gentleman wished to know was the total value of the assets of the Bank, I think, and the answer to that is that it would not be right for me at this stage, before the Select Committee has considered the matter, to name a figure here. [Hon. Members: "Why?"] I will say why. One reason is that it is not my business to provide evidence in advance for petitioners before the Select Committee. We understand that there may be petitioners who will appear before the Select Committee, as they are perfectly entitled to do, and adduce evidence through counsel that they should receive more. It is not the duty of any Member of the Government to provide evidence which may be used in this connection. With regard to this matter, we may be able, at a later date, to express our views upon some of the evidence which may be advanced in the Select Committee. Once again I venture to emphasise that

this is a Hybrid Bill, with an additional stage provided with a Select Committee, before which people who object to the Bill have quite exceptional facilities. In the ordinary way, it is not possible for people who object to a Bill passing through this House to appear by counsel, and require the House to hear their arguments. I think the proper course is to let the next stage, that of the Select Committee, follow, and to let any case which there may be against the Bill, be stated there. That is a sufficient reason why I should not name a figure.
I will add a further reason why I should not name a figure now. I do not consider that a number of the assets of the Bank are capable of exact valuation, and any valuation attached to certain of the assets of the Bank would be nothing more than a guess. I will take only one case, that of the central building of the Bank itself in Threadneedle Street and the land on which it stands. I would be very sorry to attach any credence to the estimate of any person as to the value to be attached to that asset. There are certain other assets on which it would be difficult to put a figure with any verisimilitude at all. I must ask the hon. Gentleman and the House to excuse me at this stage from answering the questions which have been put. At a later stage, when the Bill has passed through the Select Committee and has been brought back here, I will endeavour to provide, for the information of the House, a statement of what the views of the Government are, and whether or not we agree with any recommendation which has been made. I think the proper course is that the Select Committee should be empowered to go forward with their work, and I have no doubt that they will have much evidence placed before them to enable them to make their recommendations.

Captain Crookshank: In spite of the eloquence of the right hon. Gentleman, I still think that he is putting the Committee into a rather false position, because this Resolution is very tightly drawn. It is true that the House has decided to send the Bill to a Select Committee under the procedure in relation to Hybrid Bills, as is only right and proper, in a case of this sort. When a Bill is partly public and partly affects private interests, it would be very wrong if it were not examined by such a Com


mittee. The Chancellor did not mention the point, which is still true, that the Select Committee will not be able to alter this Bill. It can make a report.

Mr. Dalton: The Select Committee could not, in any case, alter the Bill, no matter how this Resolution was drawn. All that the Select Committee can do is to make a report and to suggest Amendments. They cannot make Amendments in the sense that a Standing Committee of this House can make Amendments. They can only make recommendations for Amendments for the consideration of the House.

9.30 p.m.

Captain Crookshank: That is right, and that is the point I want to emphasise. The Committee will have to hear counsel on both sides. No doubt the Government will be represented, if it comes to that stage. Having heard the evidence, the Committee will be in a position, if they so desire, to make one or more reports to this House suggesting what they consider should be changed in the Bill. The crux of the matter is that if the Government have in the meanwhile got the passage of this Resolution, and if the Select Committee have recommended alterations, they cannot be made on the Resolution. It is so tightly drawn that the actual amount of compensation is set down, and the Bill can only deal with what is in the Resolution. Therefore, the assurance that we would desire to have is whether, supposing the Select Committee send a report to the House asking that this should be altered in some way or other, the right hon. Gentleman is now prepared to say that the Government would ask for the Resolution to be withdrawn and a new one brought in and discussed before the subsequent stages of the Bill. It seems to me that the right hon. Gentleman must say "Yes," because otherwise—[Interruption]. What is the good of having a Select Committee and empowering, as the House did a quarter of an hour ago, this question to be discussed by counsel, if, at the end of the day, they are to be told, "You have had all this expenditure and argument, but nothing in the world can happen as a result"?

Mr. Dalton: I thought I had made it clear, but, if not, I will endeavour to make it clear beyond any question or ambiguity. What I sought to convey was that if the Select Committee reached

the conclusion that the payment of compensation should be changed, either upwards or downwards, I do not commit His Majesty's Government to accept their recommendations. I do commit His Majesty's Government to provide facilities for these recommendations to be discussed in the House. I think that that is what the right hon. and gallant Gentleman was asking me to do. The House will then be able to express a view on the recommendations, but I do not commit the Government to accept the recommendations of the Select Committee to vary the compensation either up or down.

Captain Crookshank: I think the right hon. Gentleman has made that point quite clear. I take it that if there were majority and minority reports, they would be discussable. I am not clear whether the right hon. Gentleman means discussable in a Debate on the Report of this Committee or discussable on an Amendment to the Bill. If the right hon. Gentleman, as he put it, will see that the matter is discussed, that is one thing; but the next stage is to see if it is possible, as a result of that discussion, for Amendments to be made. That, however, cannot be done under the Financial Resolution as it is so tightly drawn.

Mr. Dalton: I will try once more to make it clear. I am not keeping anything back or using any catch phrases. I am seeking to make it as clear as words can. If the Select Committee recommend any change in the terms of compensation, I undertake that the Government will take such steps as are necessary to see that the House has an opportunity of discussing the proposed variations. That, of course, implies that it may be necessary to amend the Money Resolution. I give the pledge;how the pledge will need to be implemented will depend on the situation. It may be that we shall find it necessary to amend the Money Resolution if such circumstances arise. If that be necessary in order that the thing shall be discussed here, that shall be done. I hope I have now succeeded in making the matter clear.

Captain Crookshank: When some hon. Members have been here a little longer, they will know that it is very important to get these matters quite clear, because they do affect very great issues, as the House has admitted by sending the matter to a Select Committee. It is


well that everybody should understand what is the effect of the procedure. I am sure that my hon. and right, hon. Friends will entirely accept with great satisfaction the very definite pledge which the right hon. Gentleman has made. I hope that at any rate answers the case that was so very well opened on this aspect of the question by my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor). Having said that we are grateful for the pledge and the way the matter is to be handled, we do not for one moment say that we approve of the Resolution to a Bill with which we thoroughly disagree.

Mr. Keeling: (Twickenham): I do not think the Committee should pass this Resolution without having further explanations from the Chancellor. The right hon. Gentleman said he was keeping nothing back. I think he is keeping a hell of a lot back.

The Deputy-Chairman (Mr. Hubert Beaumont): I must ask the hon. Member to withdraw that phrase.

Mr. Keeling: If it offends you, Mr. Beaumont, or any hon. Members, I will substitute "quite a lot." The Chancellor gave two reasons why he could not say any more. The first reason was that he did not want to supply evidence for the Select Committee. How can anything which the Chancellor says in this Committee be brought in as evidence before the Select Committee? The second reason he gave was that he did not know what the Bank's assets were worth. Will he tell us what is the value of the liquid reserves? He said he did not know what the value of the Bank of England premises is. I presume they are rated, and he might at any rate estimate the value of the premises. What the Committee ought to realise—and I think they do realise it—is that they are now being asked to put a limit to the price which is to be paid to the Bank of England for all its assets. If the figures given by my hon. Friend the Member for Harwich (Sir J. Stanley Holmes) as to the value of those assets are correct, what it amounts to is that in return for £58,000,000 worth of stock the Government are going to get the Bank of England as a profit-making concern, and are going to get £40,000,000 or

£50,000,000 of reserves in addition; in other words they are practically going to get the Bank of England as a going concern for next to nothing. It might almost be said that they are paying for the Bank of England with the shareholders' own money. We are not now being asked to say that the payment to be made to the Bank of England should be £X—the value of X to be settled by the Select Committee. We are being asked to say that the payment to be made shall be £58,000,000. I ask the Committee again to press the Chancellor for some further information.

Mr. Pickthorn: I am very apologetic—[Interruption]—hon. Gentlemen opposite may frequently find it convenient to be apologetic in the future—I am very apologetic if I have not fully understood the Chancellor of the Exchequer, but I am bound to say that I am still left in some dubiety. As far as I understood the right hon. Gentleman, his argument, or rather his pledge, was that if the Select Committee reports that the sum indicated in the Financial Resolution is inappropriate for any reason, and if it appears that any change in that sum would be outside the Financial Resolution, then His Majesty's Government will see that the Financial Resolution is amended. I think I have got the pledge straight. [Hon. Members: "No."] If I am incorrect, the Chancellor of the Exchequer will correct me, and noises below the Gangway opposite will not affect the situation at all. I think that was the pledge from the Government. The question I wish to put is whether that pledge does not come a stage too late. If I understand this procedure on Hybrid Bills aright—[Laughter]—I am not sure that I do, but I must say I think I understand it better than the hon. Members who laugh—the purpose of the Select Committee is that individuals or corporate persons who may conceive themselves to be aggrieved by the proposed legislation should have an opportunity of appearing by counsel. I think that is right.
What I do not understand about the Financial Resolution is this. As the Financial Resolution is drawn, what is the proposition which counsel can appear to advocate, in order that they should get the benefit of the Chancellor's pledge?


As far as I can see it, under the Resolution as it stands, the compensation is to be—then follow the words on the Paper, very tightly drafted, and that is the end of the matter for the Select Committee. It is there on the Paper. If we let this Resolution go, this Committee has settled that, until it has the business back before it again. Therefore, at that stage what good is the pledge of my right hon. Friend—I should say the right hon. Gentleman; I am sorry he is no friend of mine. Of what use is the pledge of the right hon. Gentleman at that stage? How would the Chairman of the Select Committee be able to rule that it was in order for counsel to appear before him to argue a proposition which is not, as far as I can see, debateable, because it is already decided by the Financial Resolution ex hypothesi—[Interruption.] To rise to move such a proposition, or endeavour to call witnesses to buttress such a proposition, would seem out of Order from the first, and what is the right view seems to me to be the question which it is necessary for the Front Bench opposite to explain to us before we ought to let this Resolution go

9.45 p.m.

Sir William Darling: Two-thirds of the Members of the House are new Members and many of us are either ignorant or innocent. There is much we ought quite properly to learn. Two-thirds of the Members know nothing about hybrids and have never heard of a Hybrid Bill until to-night. It is part of the business of the Government to educate democracy, and democracy does not consist of those well-trained levies which sit behind the Government with smiles and grins upon their faces. It consists of rather dense-minded persons among whom I am not ashamed to include myself, and I do not think the Chancellor has made the position clear to us to-night. We would not want this monstrous change to take place in our social economy without complete understanding of its full implication. I believe I speak for every Member of the House of Commons, and I speak for the people of this country who have a right to know what plans the right hon. Gentleman has in his mind. We learned from the hon. Member for Harwich (Sir J. Stanley Holmes) that the amount of money required to purchase the Bank of England is £58,000,000. I ask hon.

Gentlemen sitting behind the Treasury Bench whether they know, or can they tell me—the Chancellor cannot tell us—what we are getting for that £58,000,000. If hon. Members opposite were told that the price was to be £580,000,000 they would have accepted that figure as a reasonable price. I submit that hon. Members who are sitting on the benches behind His Majesty's Government have not done their duty. They need to explain to their constituents what they are getting for their money. I am not concerned with whether it is too much or too little, but I am concerned to know whether it is a just price that the Government and country are to pay for this State enterprise. On justice they stand or fall.
The right hon. Gentleman opposite knows that the Bank of England is an old institution, but within the last 20 years it has sold certain of its branches. The Bank of England has branches not only in the City of London; it has branches throughout the country and it is matter of public knowledge that it has sold some of these branches, and that they were sold for a price. Can he tell me what price was received for those branches, and can be tell me what price they will expect for the central building. There are facts in this field which, I humbly suggest, hon. Members would like to know. I would not like to explain to myconstituents, many of whom are houseless and possibly jobless, that the Government spent £58,000,000 on the Bank of England and did not know what they got for it. This is a matter in which the Government must help Members of the House of Commons. Two-thirds of us are new Members; we are ignorant and we ask the right hon. Gentleman to make an explanation for the benefit of the public of this country. We have not had these explanations and I submit that the Chancellor should give us further information.

Squadron-Leader Donner: On a point of Order. The hon. Gentleman the Member for Cambridge University (Mr. Pickthorn) who was not extended the courtesy of a proper hearing, made a very serious speech and made some very relevant points.

The Deputy-Chairman: I thought that the hon. and gallant Member was going to raise a point of Order but instead he is making a speech.

Squadron-Leader Donner: The point of Order that I wish to put to you, Mr. Beaumont, is that, if a substantial, carefully argued and thought-out speech is made by an hon. Member of this House, surely we are entitled to a reply from His Majesty's Government.

Mr. McKie: May I, with great respect, submit that the hon. and

gallant Gentleman the Member for Basingstoke (Squadron-Leader Donner), is entitled to a Ruling on that point?

The Deputy-Chairman: I did not accept it as a point of Order.

Question put.

The Committee divided: Ayes, 190; Noes, 86.

Division No. 14.]
AYES.
[9.50 p.m.


Adams, W. T. (Hammersmith, South)
Guest, Dr. L. Haden
Pritt, D. N.


Allen, A. C. (Bosforth)
Gunter, Capt. R. J.
Proctor, W. T.


Anderson, F. (Whitehaven)
Guy, W. H.
Pursey, Cmdr. H


Attewell, H. C.
Hall, W. G. (Colne Valley)
Randall, H. E.


Awbery, S. S.
Hamilton, Lieut.-Col. R.
Rankin, J.


Bacon, Miss A.
Hardman, D. R
Reid, T. (Swindon)


Baird, Capt. J.
Hardy, E. A.
Roberts, Sqn.-Ldr. E. O. (Merioneth)


Balfour, A.
Hastings, Dr. Somerville
Roberts, G. O. (Caernarvonshire)


Bechervaise, A. E.
Henderson, J. (Ardwick)
Robertson, J. J. (Berwick)


Belcher, J. W.
Holman, P.
Royle, C.


Benson, G.
Hoy, J.
Sargood, R.


Beswick, Flt.-Lieut. F.
Hubbard, T.
Scollan, T.


Bevan, Rt. Hon. A. (Ebbw Vale)
Hughes, Hector (Aberdeen, N.)
Scott-Elliot, W.


Bevin, Rt. Hon. E. (Wandsworth, C.)
Hughes, Lt. H. D. (W'lhampton, W.)
Segal, Sq. Ldr. S.


Bing, Capt. G. H. C.
Isaacs, Rt. Hon. G. A.
Sharp, Lt.-Col. G. M.


Blenkinsop, Capt. A.
Janner, B.
Shawcross, Cmdr. C. N. (Widnes)


Blyton, W. R.
Jones, D. T. (Hartlepools)
Shurmer, P.


Bowden, Flg.-Offr. H. W.
Jones, J. H. (Bolton)
Silkin, Rt. Hon. L.


Brook, D. (Halifax)
Kenyon, C.
Silverman, J. (Erdington)


Brooks, T. J. (Rothwell)
Kirkwood, D.
Silverman, S. S. (Nelson)


Brown, T. J. (Ince)
Lang, G.
Simmons, C. J.


Buchanan, G.
Lavers, S.
Skinnard, F. W.


Burke, W. A.
Lee, F. (Hulme)
Smith, Rt. Hon. Sir B. (Rotherhithe)


Byers, Lt.-Col. F.
Lee, Miss J. (Cannock)
Smith, Capt. C. (Colchester)


Callaghan, James.
Levy, B. W.
Smith, Ellis (Stoke)


Champion, A. J.
Lewis, T. (Southampton)
Smith, Norman (Nottingham, S.)


Chetwynd, Capt. G. R.
Lindgren, G. S.
Smith, S. H. (Hull, S.W.)


Clitherow, R.
McAdam, W.
Snow, Capt. J. W.


Cobb, F. A.
McEntee, V. La T.
Solley, L. J.


Cocks, F. S.
McGovern, J.
Soskice, Maj. Sir F.


Collick, P.
McKay, J. (Wallsend)
Stamford, W.


Collindridge, F.
McKinlay, A. S.
Stewart, Capt. M. (Fulham)


Collins, V. J.
Maclean, N. (Govan)
Sunderland, J. W.


Colman, Miss G. M.
McLeavy, F.
Taylor, H. B. (Mansfield)


Corlett, Dr. J.
MacMillan, M. K.
Taylor, Dr. S. (Barnet)


Daggar, G.
McNeil, H.
Thomas, I. O. (Wrekin)


Dalton, Rt. Hon. H.
Macpherson, T. (Romford)
Thomas, John R. (Dover)


Davies, Edward (Burslem)
Mallalieu, J. P. W.
Thomson, Rt. Hon. G. R. (E'b'gh, E.)


Davies, Clement (Montgomery)
Mann, Mrs. J.
Tiffany, S.


Davies, Ernest (Enfield)
Manning, Mrs. L. (Epping)
Tomlinson, Rt. Hon. G.


Davies, S. O. (Merthyr)
Marshall, F. (Brightside)
Ungood-Thomas, Maj. L.


Deer, G.
Mayhew, Maj. C. P.
Vernon, Maj. W. F.


Dobbie, W.
Middleton, Mrs. L.
Webb, M. (Bradford, C.)


Donovan, T.
Monslow, W.
Wells, Maj. W. T. (Walsall)


Driberg, T. E. N.
Morgan, Dr. H. B.
White, C. F. (Derbyshire, W.)


Dumpleton, C. W.
Morris, P. (Swansea, W.)
Whiteley, Rt. Hon. W.


Dye, S.
Morrison, Rt. Hon. H. (Lewisham, E.)
Whittaker, J. E.


Edwards, W. J. (Whitechapel)
Mort, D. L.
Wigg, G. E. C.


Evans. S. N. (Wednesbury)
Murray, J. D.
Wilkes, Maj. L.


Farthing, W. J.
Nally, W.
Wilkinson, Rt. Hon. Ellen


Foot, M. M.
Neal, H. (Claycross)
Williams, D. J. (Neath)


Foster, W. (Wigan)
Nichol, Mrs. M. E. (Bradford, N.)
Williams, J. L. (Ke'vingrove)


Freeman, Maj. J. (Watford)
Oldfield, W. H.
Williams, W. R. (Heston)


Freeman, P. (Newport)
Oliver, G. H.
Willis, E.


Gaitskell, H. T. N.
Paget, R. T.
Wills, Mrs. E. A.


Gallacher, W.
Paling, Rt. Hon. Wilfred (Wentworth)
Woodburn, A.


Gibson, C. W.
Paling, Will T. (Dewsbury)
Woods, G. S.


Gilzean, A.
Palmer, A. M. F.
Wyatt, Maj. W.


Glanville, J. E. (Consett)
Parkin, Flt.-Lieut. B. T.
Yates, V. F.


Gordon-Walker, P. G.
Pearson, A.
Young, Sir R. (Newton)


Grenfell, D. R.
Peart, Capt. T. F.
Younger, Maj. Hon. K. G.


Grierson, E.
Perrins, W.
Zilliacus, K.


Griffiths, D. (Rother Valley)
Porter, E. (Warrington)



Griffiths, Rt. Hon. J. (Llanelly)
Porter, G. (Leeds)
TELLERS FOR THE AYES:—




Mr. Mathers and Mr. R. J. Taylor.




NOES.


Aitken, Hon. M.
Headlam, Lt.-Col. Rt. Hon. Sir G.
Pickthorn, K.


Baldwin, A. E.
Hinchingbrooke, Viscount
Pitman, I. J.


Bennett, Sir P.
Hogg, Hon. Q.
Prescott, Capt. W. R. S.


Bower, N.
Holmes, Sir J. Stanley
Reid, Rt. Hon. J. S. C. (Hillhead)


Boyd-Carpenter, Maj. J. A.
Howard, Hon. A.
Renton, D.


Braithwaite, Lt.-Comdr. J. G.
Hudson, Rt. Hon. R. S. (Southport)
Robinson, Wing-Comdr. J. R.


Buchan-Hepburn, P. G. T.
Hulbert, Wing Comdr. N. J.
Ropner, Col. L.


Bullock, Capt. M.
Jeffreys, General Sir G.
Sanderson, Sir F.


Butcher, H. W.
Jennings, R.
Scott, Lord W.


Clifton-Brown, Lt.-Col. G.
Keeling, E. H.
Shephard, S. (Newark)


Cooper-Key, E. M.
Lambert, G.
Smith, E. P. (Ashford)


Corbett, Lieut.-Col. U. (Ludlow)
Lancaster, Col. C. G.
Spearman, A. C. M.


Crookshank, Capt. Rt. Hon. H. F. G
Legge-Bourke, Maj. E. A. H.
Stanley, Col. Rt. Hon. O.


Crowder, Capt. J. F. E.
Lindsay, Lt.-Col. M. (Solihull)
Stoddart-Scott, Lt.-Col. M.


Darling, Sir W. Y.
Linstead, H. N.
Stuart. Rt. Hon. J.


Digby, Maj. S. Wingfield
Lloyd, Maj. Guy (Renfrew, E.)
Sutcliffe, H.


Dodds-Parker, Col. A. D.
Lucas, Major Sir J.
Taylor, C. S. (Eastbourne)


Donner, Sqn.-Ldr. P. W.
Lucas-Tooth, Sir H.
Taylor, Vice-Adm. E. A. (P'dd't'n, S.)


Dower, Lt.-Col. A. V. G. (Penrith)
McKie, J. H. (Galloway)
Thorp, Lt.-Col. R. A. F.


Dower, E. L. G. (Caithness)
Maclay, Hon. J. S.
Touche, G. C.


Drayson, Capt. G. B.
Manningham-Buller, R. E.
Turton, R. H.


Duthie, W. S.
Marlowe, A. A. H.
Vane, Lt.-Col. W. M. T.


Erroll, Col. F. J.
Marples, Capt. A. E.
White, Sir D. (Fareham)


Fox, Sqn.-Ldr. Sir G.
Maude, J. C.
Winterton, Rt. Hon. Earl


Gage, Lt.-Col. C.
Mellor, Sir J.
York, C.


Gates, Maj. E. E.
Molson, A. H. E.
Young, Maj. Sir A. S. L. (Partick)


Glossop, C. W. H.
Neven-Spence, Major Sir B.



Grimston, R. V.
Nutting, Anthony
TELLERS FOR THE NOES:—


Hannon, Sir P. (Moseley)
Orr-Ewing, I. L.
Major Mott-Radclyffe and Mr. Drewe.


Haughton, Maj. S. G.
Osborne, C.



Question put, and agreed to.

Resolution to be reported Tomorow.

MINISTER OF EDUCATION (SPEECH)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Mathers.]

10.0 p.m.

Earl Winterton: I desire to call attention to a matter which, I am sure the House will agree, although it is in cheerful mood, is a matter of great importance. I suppose no one would deny that the threat of bread rationing in this country is a matter which should be treated with some gravity. I want to say nothing which could be described as discourtesy to the right hon. Lady the Minister of Education, who is, if I may be permitted to say so, an esteemed Member of our Assembly. [Hon. Members: "No, no."] Yes, I use the phrase deliberately. This is not a party matter, but a matter which has caused a great deal of perturbation in a number of homes in the country. The statement of the right hon. Lady has been directly contradicted by two Cabinet Ministers, and, however it might be considered here, it is not a matter which, outside this House, would be considered lightly. Therefore, I intend to deal with the matter seriously, to give the Government an opportunity, which I am sure they will be only too glad to take, of acknowledg

ing that a mistake has been made in the speech which was delivered.
There is a precedent for this action. Some years ago, I made a speech, as a Member of the Government, on the subject of relations with Russia. That speech caused some criticism, and the present Under-Secretary of State for India raised the question on the Motion for the Adjournment. I venture to think that the words he used on that occasion apply exactly to the present situation. He said:
A statement was made publicly by a British Cabinet Minister—
that is, myself—
—a right hon. Gentleman who is a member of the Cabinet, and, as such, his views were broadcast throughout the world. I think, therefore, that it is only right that these statements, if they be untrue, should be publicly withdrawn.
That is my justification for raising this matter to-night, and I hope the right hon. Lady will follow my example. I said a moment ago that I wanted to make no attack on her; in fact, I go further than that and say that I think she is to a great extent suffering because of the dislike of her colleagues to giving information. Indeed, of those who voted in a Gallup Poll on the question whether the Government gave sufficient information on questions agitating the country, over 50 per cent. said that they did not. I will quote examples—the refusal of the Government to give a specific answer on


the number of personnel in the Armed Forces; their complete refusal to give any information as to the future Constitution of Palestine—a situation which has resulted in aggravating the troubles in that country—the refusal of the Minister of Health to give any information as to the number of houses being built, and the refusal of any Member of the Government to state what has been the effect of the dock strike on exports and imports.
The reason for this is obvious and there I must say that I think the Opposition and the Opposition Press have been extremely tolerant with the Government on this matter. Hon. Members opposite know perfectly well what the reason is, and nobody better than the Leader of the House, who is present to-night. The reason why the Government have denied information to the public about the calamitous effect of the dock strike is that it is politically inconvenient to call attention to the fact that a number of dockers, who are strong supporters of Socialism, have struck against their trade union leaders and also against the Socialist Government who are in effect, although not in name, their employers. No matter what the injury to the export trade or damage to the interests of the country, the object of the Government is to be very mild and say as little as possible, to say, "It is deplorable that these people should strike, and that we should have to bring in soldiers, but cry the whole thing down as much as possible in the Press and in the House, because if you do not you will show that a Socialist Government means universal strikes."[Laughter.] Hon. Members are inclined to laugh. I never mind a little laughter, but I can assure you that the people of this country, particularly in the constituencies where the dockers are striking, are not laughing at all at this situation. Hon. Members may think it funny, but other people do not. Hence, this undue reticence on the part of the Government.
The right, hon. Lady has been a victim, as I say, of the reticence of her own party. Being a very courageous person she is, to vary a well-known metaphor, the angel who rushed in where her male colleagues, the archangels, feared to tread. Her action would have been most public-spirited, so unlike that of her friends behind her, who treat this matter as a

question of mirth. Her colleagues seem to take this strike as an extraordinarily funny thing. The right hon. Lady, who is considerably more courageous and more public-spirited than a great number of her supporters, thought it necessary to make a statement on the subject. I think it was a very valuable thing to have done, if her statement had not been directly contrary to the facts. There was only one thing wrong with it; it did not represent the facts. What was the statement? She spoke at Jarrow, in the midst of the dock strike, and one would have supposed that she would have consulted her right hon. Friend beside her who, from his appearance at this moment, seems to be a very genial person. But she did not consult him, nor did she consult the Minister of Labour. These are the words she used:
Unless grain ships can be turned round quickly enough to get to Canada and away again before the St. Lawrence freezes, bread will have to be rationed in Britain this winter.
The House now being in serious mood may I say this: I stand here and assert at this Box and I have reason to know from correspondence which has reached a great number of Members, that that statement caused perturbation. I challenge hon. Gentlemen opposite to roar with laughter at that statement. They have at least got some sense of decency. The statement made by the right hon. Lady was completely contradicted yesterday by the right hon. Gentleman the Minister of Labour, who, I think, with a good deal of joy at being able to contradict his colleague, got up and said:
I am happy to have the authority of my right hon. Friend the Minister of Food to say there is no intention to ration bread."—[OFFICIAL REPORT, 30th October, 1945; Vol. 415, c. 248.]
The Minister of Food went even further. I ask this specific question which I hope will be answered by the right hon. Lady or the Leader of the House: Can we have an assurance that, in future, in matters of grave moment affecting the welfare and the life of every person in this country, there will not be contradictory statements of this kind by Members of the Government, and that when it is necessary to make a statement on matters of important policy it will be made either by the head of the Government, the appropriate Minister concerned, or if any other Cabinet Minister makes it, he or she


will do so with the authority of the Minister responsible and in this House? Failing that, I can assure Members of the Government opposite, to whom I am most grateful for the courtesy extended to me, and whose mirth—they think things funny that the rest of the world do not think funny; and they think things serious which the rest of the world regard as fantastic—and if I may indulge in a sense of humour, I would say that in forty years in this House I have never perceived such a remarkable collection as those who sit on the benches opposite.

10.10 p.m.

The Minister of Education (Miss Ellen Wilkinson): I am glad that the right hon. Gentleman has raised this matter tonight, because it gives me an opportunity of telling the House the exact facts of the situation, and of putting them in the proper perspective. I am a little surprised at the right hon. Gentleman, who has chosen to raise the matter in the House, because he has not, in the twenty years that we have sat together in this House, himself been noted as a model of discretion. Perhaps the simplest way in which I can deal with this matter is just to state facts. I was addressing some young people in my constituency which—I have to correct the right hon. Gentleman—is not thecentre of the dock strike; there are, I think, no dockers out on strike in that area. I talked to these young people, among other things, about trade unionism, and about the danger that unofficial strikes might break down effective trade union machinery. I told them that I was speaking not as a Cabinet Minister, but as a former trade union organiser. [An Hon. Member: "You cannot."] I am telling the House the facts. This is what I said. I am going to quote the actual words I used, and I believe that

these were the words sent verbatim by the local reporter. I want to make it perfectly clear that it was a piece of honest reporting and that no blame whatever attaches to the reporter. Speaking of the dock strike, I said:
While the weight of loss falls on the ordinary man and woman and especially on the troops facing the most difficult winter of the war. The dockers' children attending our primary schools can tell their fathers the date when the St. Lawrance freezes. Unless the grain ships can be turned round quick enough to get to Canada, and away again before that date, bread might have to be rationed here this winter. There are ships lying loaded in the docks full of hides now rotting that are desperately needed to make the shoes for children to go to school in.
That was what I said. This House is traditionally generous to those who make mistakes and honestly confess them. While I was speaking I thought I was giving a simple illustration of the possible consequences that might result if the strike was long continued. It did not occur to me, and I am sure it did not occur to anyone in the small group to whom I was speaking, that I was making a Cabinet pronouncement about rationing. Obviously that could and would only be made by the Minister of Food.
I do not blame the newspapers. I can see how they dramatised the news when it came over the wire in words quite divorced from their context. There is really nothing more that I can say, except to state to the House that while regretting the consequences that occurred, which I do not deny, I can merely say that in future I shall be very careful in the illustrations that I use in making speeches.

Adjourned accordingly at Sixteen Minutes past Ten o'Clock.